Yahoo Finance In Less Than a Year, You Might Not Be Able To Afford To Live in These 6 US Housing Markets
If you’re shopping around for a new home, you’ve probably already seen the impact that rising costs have had on the real estate market. In many parts of the United States, housing is either unaffordable or quickly becoming that way. For many buyers, especially first-time buyers, this has made the barrier of entry to homeownership higher than ever.
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While you shouldn’t let this deter you from getting a home if that’s your goal, it never hurts to know which areas are out of reach — or about to be. Here are some U.S. housing markets where the average person might not be able to afford to live in the near future, according to experts.
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New York City
“Affordability is a challenge throughout. With increased cost of living and wages not increasing in line, many are overleveraged/burdened with their housing costs,” said Nikki Beauchamp, an associate broker at Sotheby’s International Realty.
“I am a broker in New York City, where there is a high percentage of rent-burdened and severely rent-burdened households,” she continued. “It is a market where buying a home can be very complicated, not only by price, but some of the requirements of the housing stock that is available for sale — in NYC, we have cooperative apartments, where each building has different financial requirements.”
According to Zillow, the average sales price of a home in New York City is $742,930. However, home prices can easily go well beyond that. And when you factor in the overall high cost of living in the city, many people can’t afford to live there.
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Boston
“In Boston, housing has become so expensive that the state is mandating land be set aside near public transit for the construction of multi-family housing,” said Jeremy Bohne, founder of Paceline Wealth Management, LLC. “That’s because people who can’t afford a car can’t find housing where they would have access to public transportation.”
Smaller businesses and hourly workers in particular are struggling in this housing market.
“Where living costs are really high, small businesses such as restaurants are struggling to find workers,” Bohne added. “For many hourly workers, housing is too expensive where some jobs are located, and it doesn’t make sense to take an hourly position if they would face a really long commute.”
For buyers, the average cost of a home in Boston is $755,536, a 4.6% increase from last year.
Hudson Valley and Catskills Region (New York)
New York City isn’t the only housing market with unaffordable homes. The Hudson Valley and Catskills regions are quickly becoming more expensive, too.
“As more people continue to seek refuge from urban areas, particularly NYC, these areas become ever more popular. This increased demand has driven home prices up at a rapid pace, with double-digit price appreciation year after year,” said Angelica Ferguson VonDrak, associate real estate broker at Sotheby’s International Realty.
Several factors play into the rapid rise in property values in these areas.
“First, the notable influx of buyers from urban centers,” she said. “Many people are looking for more space, a better quality of life and a closer connection to nature, especially in the wake of the pandemic. And they are able to work remotely now.
“The scenic beauty and cultural richness of the Hudson Valley and Catskills make these areas highly attractive, along with the relatively easy commute to NYC.”
But it’s not just that. According to VonDrak, the supply of available homes simply hasn’t kept up with the surge in demand. This, of course, has led to higher prices.
“We’re also seeing many higher-income buyers entering the market, willing to pay a premium for turnkey properties,” she said. “This dynamic often prices out local residents and average-income households. … The competition is fierce, with multiple buyers often bidding on the same property, driving prices even higher. And to top it off, as property values rise, so do property taxes — so the costs are increasing all around.”
Los Angeles and the Bay Area
Parts of Northern and Southern California, specifically Los Angeles and the Bay Area, are also largely unaffordable.
Homes in Los Angeles cost an average of $967,128, a 6.4% increase over the past year. Properties in San Francisco cost around $1,299,639 on average.
Beauchamp said, “The West Coast fares the worst with the gap between what the median home price is, the income needed to afford the home and the actual median income people are earning.”
Charlotte and Wilmington, North Carolina
You might not think of North Carolina as being unaffordable, but the cost of living — particularly housing — has risen significantly over the past few years.
“From our recent experience, we’ve seen many U.S. housing markets shifting and some becoming increasingly unaffordable due to soaring home prices outpacing income growth,” said Jordan Kavana, a real estate industry expert. “Charlotte and Wilmington, North Carolina, are performing very well, while Atlanta and Tampa are showing signs of slowing. Austin is notably decelerating, and Tampa has recently exemplified a high-supply market.”
The average cost of a home in Charlotte is $402,906, a 5.5% one-year increase. In Wilmington, homes go for around $409,504 on average, a 6.4% increase from last year.
Rockford, Illinois
The cost of homes in Rockford isn’t exactly jaw-dropping. According to Zillow, the average home there costs just $157,878.
But housing prices have risen dramatically — up 14.9% in just one year. If this trend continues, the once-affordable town could quickly become out of reach, though it might take more than a year for it to reach that point.
“Even some older Rust Belt cities such as Rockford, Illinois, have seen a spurt in home prices, according to a report compiled by Realtor.com and published in the Wall Street Journal,” said Barry Hersh, clinical professor at NYU School of Professional Studies’ Schack Institute of Real Estate. “Rockford, long a slow market, has seen the sharpest 2024 price increases in the U.S.”
Many Factors Affect the Housing Market
The U.S. housing market is complex, and many factors influence the cost of living throughout the country.
“The post-Covid growth of work from home, shorter work weeks and other hybrid models have impacted where people chose to buy homes,” Hersh said. “Someone who commutes three or fewer days per week has a new set of options. They cannot locate anywhere, but can choose to tolerate a longer but less frequent commute.
“This opens up outer suburban and even ex-urban areas, allowing buyers to afford a more suburban or even rural lifestyle, larger houses and to remain close enough to commute and also easily visit family and friends. This has strengthened the market in a range of exurban and older communities, eventually making them less affordable. … As new work patterns become stabilized, we’re likely to see further effects on commercial and residential, both owner and rental, real estate markets.”
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This article originally appeared on GOBankingRates.com: In Less Than a Year, You Might Not Be Able To Afford To Live in These 6 US Housing Markets
