The U.S. Cities Where You’re Least Likely To Own a Home [2024]

SAVING & SPENDING - BUDGETING & EXPENSES
The FinanceBuzz team used government and housing industry data to find the cities where it is hardest and easiest for non-homeowners to buy a house.
Updated Feb. 22, 2024
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Homeownership has long been seen as a major milestone, but these days, fewer and fewer people are able to make that dream a reality. Over the years, homeownership rates have been on a steady decline, driven by factors such as limited housing supply, high sale prices, and stagnant income levels. 

This trend persists across the nation and is particularly pronounced in certain cities. The FinanceBuzz team analyzed government and housing industry data from America’s 100 largest cities to find out where homeownership is most and least attainable.

In this article

Key findings

  • Newark, New Jersey; Miami, Florida; and Los Angeles, California are the cities where buying a house is most difficult.
  • Homeownership is most attainable in Gilbert, Arizona; Anchorage, Alaska; and Chesapeake, Virginia.
  • California has seven cities in the top 25 metropolitan areas where homeownership is most difficult to attain.

How we chose these metrics and cities

This analysis includes the 100 largest cities in the U.S. based on the most recent Census estimates. To determine how difficult it is for someone to become a homeowner, we looked at several general economic factors and housing-specific data points in each city. Specific metrics include the following:

  • Median household income: Higher incomes make houses more affordable.
  • Median home sale price: Lower home sale prices indicate higher housing affordability.
  • Income to home price ratio: Buying a house in high-income areas can still be difficult if housing prices are even higher. This metric looks at the median household income level as a proportion of the median home price. Experts recommend buying a home that costs no more than 3 to 5 times your household income.
  • Monthly rent cost as a percentage of income: If the average renter is paying a large portion of their income on rent, it can be difficult to save enough money to buy a home or make a down payment on a mortgage.
  • Monthly mortgage costs as a percentage of income: Experts recommend that a mortgage should cost no more than 28% of your gross income, making homeownership more difficult in cities where that percentage is higher.
  • Median mortgage interest rate: Higher interest rates mean higher monthly mortgage payments, which fewer people can afford.
  • New home construction: High rates of new home construction mean an increased inventory of options for potential homebuyers, while low rates increase competition for existing homes.
  • Homeowner vacancy rate: Cities with high demand and competition for housing tend to have lower rates of vacant homes.
  • Homeownership rate: Cities with high homeownership rates indicate an environment where buying a home is more attainable.
  • Median student loan debt: Existing debt can be a major barrier when buying a home, and student loans can be a significant source of debt for younger people looking to buy a home.

The 10 cities where you’re least likely to own a home

So, in which cities is the dream of homeownership most likely to remain just that — a dream? We examined the 10 cities with the highest overall “unattainability scores” in our analysis.

cities where homeownership is least attainable graphic

1. Newark, NJ

Prospective homebuyers in Newark may need to find ways to make extra money if they want to afford a house there, as the city has one of the 10 lowest median household incomes at around $50,000. It also has one of the country’s 20 highest median home prices, at $665,000. As a result, the income-to-home price ratio in Newark is one of the highest in the country. Newark is also tied for the lowest homeownership rate in the country (30%) and the lowest rate of new home construction per capita.

2. Miami, FL

The median mortgage payment in Miami costs 54% of median household income, the highest rate in the country. Additionally, Miami is tied with Newark for the lowest homeownership rate in the country, while Miami renters spend 31% of their gross income on rent on average–one of the three highest rates in the country.

3. Los Angeles, CA

Seven different California cities rank in the top 25 (including five in the top 10) in cities where becoming a homeowner is least attainable, with Los Angeles leading the way. The average Angelino family would have to spend 51% of their gross income to afford the median mortgage costs in LA, the second highest percentage in the country. High median home sale prices ($897,600) mean that even though the median household income in Los Angeles is middle of the road ($76,135), the income-to-home price ratio in the city is still among the highest in the country, at 11.8.

4. New York, NY

The median student loan debt in the Big Apple is $26,482, which ranks among the five highest cities across the country in that category. A homeownership rate of just 33% and one of the 15 lowest rates of new home construction solidly lands NYC in the top five cities where it is hardest to become a homeowner.

5. Long Beach, CA

Long Beach has underlying metrics similar to those of nearby Los Angeles, including median home sales and income-to-home price ratios. However, household incomes are slightly higher in Long Beach, while rent costs as a percentage of income are lower.

6. Anaheim, CA

Anaheim is home to Disneyland, and being neighbors with Mickey Mouse doesn’t come cheap. The median home in Anaheim sells for more than $1.3 million, tied for the second-highest price in the nation. Similarly, Anaheim’s income-to-home price ratio is the second highest of any city.

7. Boston, MA

Boston lands in the top 10 thanks mainly to a median home sale price of $745,100, one of the 15 highest costs in the country. Additionally, Bostonians have a top-five median student loan debt of $27,223.

8. Santa Ana, CA

The final of four cities in the greater Los Angeles area to make the top 10, Santa Ana’s income-to-home price ratio is 16.4, the highest of any city.

9. Detroit, MI

The median household income in Detroit is just $36,453, the lowest of anywhere in the country. That low starting income means that even modest rent payments consume a large chunk of a family’s income, resulting in the highest percentage of income spent on rent of any city (33%). Additionally, Detroit is tied for the city with the second-highest median mortgage interest rate, at 5%.

10. Oakland, CA

The final Golden State city in the top 10, Oakland has a median home sale price of $1.3 million, the fifth-highest in the country. That high sale price means that even though households have a median income above $90,000 in Oakland, the income-to-home price ratio is still among the highest in any city (14.0).

The 10 cities where you’re most likely to own a home

While the cities highlighted above contain significant hurdles for hopeful homeowners, there are plenty of cities with environments that are much more accommodating for those looking to buy a house.

cities where homeownership is most attainable graphic

1. Gilbert, AZ

Gilbert, Arizona, is the city where homeownership is most attainable across the entire country and one of three different cities in the Phoenix metro area that land in the top 10. The median household income in Gilbert is over $110,000, among the 10-highest in the country, while the median home sale price is in the mid-$400,000s. Additionally, the median mortgage payment amounts to just 21% of the median household income in Gilbert, the lowest rate in the country.

2. Anchorage, AK

In another city with a median household income over $100,000, just 16% of monthly income is needed to cover the median monthly rent payment in Anchorage, a rate two points lower than any other city nationwide

3. Chesapeake, VA

Homes in Chesapeake are very affordable, with a median sale price of $344,500. Coupled with a median household income of $87,749, Chesapeake’s income-to-home price ratio of 3.9 is right in the middle of what experts advise while also being one of the 30 lowest in the country.

4. Chandler, AZ

Chandler is the second city near Phoenix in the top five. While some factors are different, such as Chandler’s higher homeowner vacancy rate and lower homeownership rate, Chandler ranks in the top five thanks to many of the same factors that landed nearby Gilbert in the top spot, such as a high median income, reasonable home sale prices, and a low percentage of income needed to pay average mortgage costs.

5. Huntsville, AL

Housing in Huntsville is very affordable, as renters need to spend just 19% of their income on rent, and homeowners need to spend just 25% of their income on mortgage payments, both of which are among the 10 lowest rates in the country. Additionally, Huntsville has built 1,755 new homes per 100,000 people since 2020, one of the 10 highest rates in the country.

6. Plano, TX

With a median household income of $103,916 and a median home sale price of $385,700, Plano’s income-to-home price ratio is the second-lowest in the country, at 3.7.

7. Scottsdale, AZ

The final city in the top 10 located in the Phoenix metro area, Scottsdale has the fourth-highest homeownership rate in the country at 67%. Scottsdale is also one of just 12 cities where the median household income exceeds the $100,000 mark.

8. Port St. Lucie, FL

Port St. Lucie has the highest homeownership rate of any city in the country, as 85% of all houses in the city are currently occupied by the homeowner as opposed to renters. Located on Florida’s Atlantic coast, the city has also seen more new homes built per capita in recent years than anywhere else in the country, with more than 2,800 new houses built per 100,000 people since 2020.

9. Fremont, CA

The median household income in Fremont, located between San Francisco and San Jose, is more than $160,000, more than any other city in this analysis. That high income level helps soften the blow of median home sale prices over $1 million. It helps keep rent and mortgage payments reasonable enough for the city to rank in the top 10 in terms of homeownership attainability. Fremont is also tied for the third-lowest median mortgage interest rate at 3.875%.

10. Wichita, KS

Wichita’s median rent and mortgage payments as a percentage of income are among the lowest in the country. However, the biggest reason this city finishes in the top 10 when it comes to ease of buying a house is that the median home sale price in Wichita is $224,300, the second-lowest price in the country.

A city-by-city breakdown of home ownership attainability

City Overall home attainability score Median household income Median home sale price Income to home price ratio Rent as % of monthly income Mortgage as % of monthly income Median mortgage interest rate New homes per 100K since 2020 Homeowner vacancy rate Homeownership rate Median student loan debt
Newark, NJ 86.5 $49,688 $665,000 13.4 31% 51% 4.5 65 1.7 30% $18,750
Miami, FL 79.8 $60,989 $602,500 9.9 31% 54% 4.75 1,593 1.5 30% $20,525
Los Angeles, CA 78.0 $76,135 $897,600 11.8 28% 51% 4.25 558 0.8 36% $19,293
New York, NY 74.9 $74,694 $665,000 8.9 27% 48% 4.125 281 1.6 33% $26,482
Long Beach, CA 71.8 $80,493 $897,600 11.2 26% 41% 4.25 294 1 42% $19,500
Anaheim, CA 71.7 $85,133 $1,305,000 15.3 28% 41% 4.25 258 0 45% $15,939
Boston, MA 70.7 $86,331 $745,100 8.6 27% 39% 4.25 731 0.7 35% $27,223
Santa Ana, CA 70.5 $79,351 $1,305,000 16.4 29% 34% 4.25 146 0.8 44% $14,817
Detroit, MI 67.3 $36,453 $266,600 7.3 33% 38% 5 95 4.2 50% $19,228
Oakland, CA 67.2 $93,146 $1,300,000 14.0 24% 44% 4.25 768 1.4 44% $22,777
Honolulu, HI 65.7 $82,006 $1,061,900 12.9 25% 40% 3.5 181 0.8 47% $21,842
Baltimore, MD 65.2 $55,198 $406,300 7.4 27% 35% 4.75 281 2 48% $22,939
San Diego, CA 65.1 $100,010 $978,500 9.8 26% 35% 4.25 347 0.6 47% $20,120
New Orleans, LA 64.4 $52,322 $281,500 5.4 26% 45% 4.874 256 1.5 55% $26,473
Cleveland, OH 64.1 $37,351 $236,700 6.3 29% 36% 4.75 552 1.2 40% $21,669
Orlando, FL 62.4 $65,354 $436,500 6.7 29% 35% 4.875 1,383 0.8 40% $20,372
Milwaukee, WI 62.4 $49,270 $386,100 7.8 23% 34% 4.25 217 1.3 41% $21,700
Cincinnati, OH 62.3 $48,130 $293,300 6.1 23% 37% 4.74 331 0.8 40% $23,387
Richmond, VA 62.2 $58,988 $401,700 6.8 24% 36% 4.75 732 0.7 43% $23,000
Dallas, TX 61.9 $65,400 $385,700 5.9 25% 41% 4.875 776 0.7 41% $20,511
Philadelphia, PA 61.3 $56,517 $368,500 6.5 27% 32% 4.75 478 1 51% $22,601
Tucson, AZ 60.5 $51,281 $381,600 7.4 25% 32% 4.75 529 0.9 52% $17,787
Aurora, CO 60.2 $81,395 $673,000 8.3 25% 29% 4.69 957 0.4 62% $22,263
Riverside, CA 60.1 $81,228 $565,000 7.0 26% 33% 4.511 199 0.5 52% $19,079
Chula Vista, CA 59.9 $101,190 $978,500 9.7 24% 34% 4.25 514 0.1 58% $16,569
Memphis, TN 59.8 $50,622 $280,000 5.5 26% 32% 4.75 407 0.4 46% $22,512
Portland, OR 59.1 $81,119 $593,400 7.3 22% 34% 4.5 548 0.9 51% $24,856
Houston, TX 58.6 $60,426 $345,600 5.7 25% 40% 4.75 943 1.4 41% $19,455
Spokane, WA 57.8 $62,287 $433,200 7.0 22% 30% 4.79 186 0.5 60% $19,830
Irvine, CA 57.7 $123,003 $1,305,000 10.6 27% 35% 4.25 1,610 1.5 42% $14,817
Chicago, IL 57.2 $70,386 $365,100 5.2 23% 36% 4.815 370 1 46% $24,056
San Francisco, CA 56.5 $136,692 $1,300,000 9.5 20% 35% 3.875 704 1.4 39% $22,441
Buffalo, NY 56.3 $48,904 $260,600 5.3 24% 25% 4.75 296 0.2 44% $22,178
Sacramento, CA 56.1 $80,254 $542,000 6.8 25% 33% 4.5 660 0.4 53% $17,625
Norfolk, VA 55.9 $61,090 $344,500 5.6 24% 34% 4.75 535 2.1 48% $21,417
Jersey City, NJ 55.9 $94,080 $650,500 6.9 23% 36% 4.125 1,170 2 30% $23,398
Tampa, FL 55.8 $71,089 $415,000 5.8 27% 33% 4.75 1,245 1.2 49% $21,805
Fresno, CA 55.8 $64,196 $420,000 6.5 25% 34% 4.5 842 0.3 51% $15,026
Stockton, CA 55.3 $76,231 $542,000 7.1 23% 31% 4.5 295 0.9 56% $15,210
Denver, CO 55.1 $88,213 $673,000 7.6 23% 30% 4.69 1,707 1.1 50% $23,868
San Jose, CA 55.0 $133,835 $1,850,000 13.8 22% 33% 3.875 465 0.8 55% $17,500
St. Petersburg, FL 54.8 $69,941 $415,000 5.9 27% 31% 4.75 610 2.6 60% $23,691
Irving, TX 54.6 $78,326 $385,700 4.9 23% 32% 4.875 624 0.1 39% $19,303
St. Louis, MO 54.2 $52,847 $268,600 5.1 21% 32% 4.85 202 2.4 47% $23,733
St. Paul, MN 54.2 $67,725 $387,900 5.7 22% 31% 4.75 413 0.9 54% $23,023
Columbus, OH 53.9 $61,727 $323,400 5.2 23% 28% 4.75 763 0.8 43% $23,129
Tulsa, OK 53.8 $54,040 $258,700 4.8 22% 32% 5 380 0.7 51% $18,875
Las Vegas, NV 53.7 $68,905 $460,600 6.7 25% 31% 4.7135 870 1.3 59% $16,441
Seattle, WA 53.4 $115,409 $744,300 6.4 20% 34% 4.5 926 1 44% $23,914
Reno, NV 53.2 $72,103 $608,000 8.4 24% 30% 4.625 2,331 2.1 50% $18,733
San Antonio, TX 53.2 $58,829 $332,200 5.6 25% 34% 4.75 1,237 1.1 52% $18,790
Arlington, TX 53.1 $70,433 $385,700 5.5 23% 31% 4.99 629 1.4 54% $20,067
Kansas City, MO 52.7 $62,175 $328,800 5.3 22% 31% 4.75 762 0.3 54% $23,198
Toledo, OH 52.6 $47,365 $186,300 3.9 21% 27% 5 300 0.2 56% $23,857
Lubbock, TX 52.4 $56,910 $230,200 4.0 23% 35% 5.125 1,162 0.5 50% $19,008
El Paso, TX 52.0 $52,645 $254,600 4.8 22% 33% 5 633 0.9 59% $17,407
Greensboro, NC 51.9 $55,120 $287,700 5.2 24% 27% 4.49 543 1.1 50% $25,476
Washington, D.C. 51.6 $101,027 $612,600 6.1 22% 34% 4.5 1,610 1.6 41% $29,572
Phoenix, AZ 51.3 $75,969 $467,200 6.1 23% 26% 4.75 770 0.6 58% $18,458
Minneapolis, MN 51.2 $74,473 $387,900 5.2 20% 31% 4.75 925 0.2 48% $23,701
Colorado Springs, CO 50.7 $78,568 $466,300 5.9 23% 29% 4.74 1,032 0.3 60% $20,130
Glendale, AZ 50.6 $72,411 $467,200 6.5 23% 24% 4.75 756 1.3 60% $17,973
Fort Worth, TX 50.3 $71,527 $385,700 5.4 22% 33% 4.99 1,350 0.4 60% $19,455
Winston-Salem, NC 50.1 $54,195 $299,400 5.5 22% 29% 4.375 654 1.6 54% $25,207
Indianapolis, IN 50.1 $61,501 $316,400 5.1 20% 26% 4.875 471 0.7 57% $22,272
Corpus Christi, TX 50.0 $60,958 $279,500 4.6 23% 35% 4.75 376 1 58% $14,537
Bakersfield, CA 49.7 $72,017 $383,300 5.3 23% 31% 4.74 453 0.8 60% $14,530
Albuquerque, NM 49.5 $64,757 $363,200 5.6 19% 27% 4.875 393 0.6 64% $19,673
Garland, TX 48.7 $71,191 $385,700 5.4 25% 29% 4.875 1,214 1.2 59% $16,450
Charlotte, NC 48.7 $74,401 $406,900 5.5 24% 27% 4.5 1,346 0.8 51% $26,453
Raleigh, NC 48.6 $75,424 $478,600 6.3 23% 28% 4.25 1,370 1.4 51% $24,793
Nashville, TN 48.5 $71,767 $413,600 5.8 24% 29% 4.75 2,321 1.2 52% $26,319
Jacksonville, FL 48.1 $69,309 $390,000 5.6 24% 27% 4.75 1,284 1.5 57% $19,986
Mesa, AZ 48.0 $79,496 $467,200 5.9 23% 25% 4.75 686 0.9 65% $18,051
Lincoln, NE 48.0 $62,391 $295,900 4.7 19% 31% 4.75 549 0.7 56% $19,752
Omaha, NE 47.8 $67,450 $297,800 4.4 20% 29% 4.75 432 0.2 57% $21,014
Madison, WI 47.3 $73,647 $428,300 5.8 21% 32% 3.625 710 0 46% $23,592
Austin, TX 47.2 $89,415 $485,700 5.4 21% 33% 4.625 1,684 1 44% $21,859
Fort Wayne, IN 46.9 $58,439 $243,000 4.2 20% 23% 5 136 1.1 63% $22,234
Atlanta, GA 46.8 $83,251 $379,200 4.6 23% 31% 4.75 1,820 1.5 46% $28,907
Durham, NC 46.5 $78,105 $483,200 6.2 21% 24% 4.25 1,475 0.5 52% $28,073
Boise, ID 46.4 $81,425 $485,900 6.0 20% 25% 4.75 869 1 66% $21,965
Henderson, NV 46.2 $81,695 $460,600 5.6 25% 28% 4.7135 1,682 0.6 65% $20,977
North Las Vegas, NV 45.9 $75,459 $460,600 6.1 25% 27% 4.7135 1,780 0.2 65% $15,320
Virginia Beach, VA 45.9 $83,245 $344,500 4.1 22% 27% 4.75 214 1.2 63% $23,000
Lexington, KY 45.8 $62,908 $265,100 4.2 20% 30% 4.5 758 0.4 54% $24,572
Pittsburgh, PA 45.7 $63,380 $231,100 3.6 22% 26% 4.609 392 2 49% $22,601
Laredo, TX 45.2 $59,751 $279,500 4.7 20% 31% 4.75 495 0.9 63% $13,141
Louisville, KY 45.2 $63,049 $271,900 4.3 19% 27% 4.75 610 0.6 62% $22,381
Oklahoma City, OK 44.2 $63,713 $251,200 3.9 19% 30% 5 1,112 0.8 58% $19,910
Wichita, KS 44.1 $59,277 $224,300 3.8 18% 28% 4.99 466 1.8 61% $19,649
Fremont, CA 43.7 $162,336 $1,300,000 8.0 20% 29% 3.875 1,404 1.5 61% $20,500
Port St. Lucie, FL 43.1 $70,613 $413,600 5.9 28% 30% 4.75 2,846 0.6 85% $19,500
Scottsdale, AZ 42.7 $100,636 $467,200 4.6 23% 27% 4.75 1,056 1.1 67% $23,936
Plano, TX 42.2 $103,916 $385,700 3.7 20% 28% 4.875 733 0.3 56% $23,007
Huntsville, AL 41.1 $68,930 $325,200 4.7 19% 25% 4.75 1,755 0.5 58% $25,326
Chandler, AZ 40.9 $98,664 $467,200 4.7 22% 22% 4.75 894 1.5 64% $21,831
Chesapeake, VA 40.4 $87,749 $344,500 3.9 20% 27% 4.75 666 0.2 73% $24,461
Anchorage, AK 39.4 $100,751 $447,200 4.4 16% 26% 4.625 108 1.2 65% $19,950
Gilbert, AZ 36.7 $111,393 $467,200 4.2 22% 21% 4.75 1,045 0.1 74% $21,335
100 City Average 55.8 $73,956 $501,381 6.6 23% 32% 4.626 796 1.0 52% $21,158

Expert insights

Babatunde Odusami, Ph.D. CFA

Professor of Finance
Widener University

For those who might be anticipating a repeat of the 2008 housing market crash, are their fears valid?

A crash is unlikely to occur in the near term because, in many parts of the country, the demand for housing still far outstrips the supply of homes. And this will continue to place upward pressure on prices rather than trigger a crash. Some factors driving the excess demand for homes include the lower-than-normal levels of new home construction over the past decade, the large number of aspiring millennial homeowners, the largest population cohort, and the baby boomers deciding to age in place rather than downsize.

There is also the reluctance amongst many homeowners to trade up or trade down because that would mean a loss of the cheap sub-5% mortgage rate they obtained in the post-COVID period. Lastly, institutional investors are entering the single-family residence (SFR) market. You might see some price corrections in markets that experienced extreme price runups. Still, the indicators for an impending crash, such as excessive speculation in home investments, are just not common in the housing market.

It’s clear that many prospective homebuyers are entering an expensive market. What are some things that they can keep in mind to remain hopeful?

It is still a seller’s market in many parts of the country for those who want to buy homes, and it will be for some time. Rents are becoming more affordable than owning a home because of the supply of rental units and the number of rental units that are in the pipeline. Eventually, the imbalance will self-correct, which will bring prices more in line with affordability. Personal homes are illiquid assets, they are not that easy to monetize unless you are willing to take on more debt. So, you should be very clear-eyed about your finances when you are buying a home.

For example, if you consider a home as an investment, then the first home you buy could be an investment property and not a personal home if the area you are interested in for your personal home is still out of reach. Doing this will allow you to still get the financial gains of homeownership without necessarily living in it. The downside to this approach is that you may not be able to obtain the capital gains tax exemption if you don’t reside in the property for two out of the five years preceding the sale of the property.

What do you believe are the contributing factors for cities where home prices are drastically falling?

There is this common cliché that “the best cure for high prices is high prices”, and that holds for many of the cities experiencing drastically falling home prices. Many of these cities such as Austin and Houston, which are both in Texas, experienced a significant runup in home prices due to the COVID-induced work-from-home in-migration into these areas. The higher prices then boosted the supply of existing and newly constructed homes.

The demand for homes is now waning in these areas due to higher interest rates and return-to-work policies from the companies whose offices are located in the regions where most of the transplants were in-migrating from. Prices are now adjusting to reflect these new realities. During the peak demand period, the median days on the market for home listings in those cities was as little as a day. Currently, the median days on the market for many Texas metro areas is close to 50 days.

Roger Lin, JD, MA, MS

Adjunct Professor, Costello College of Business, Real Estate Development program
George Mason University

For those who might be anticipating a repeat of the 2008 housing market crash, are their fears valid?

While real estate is location-specific, the U.S. housing market, by and large, behaves in accordance with the Law of Supply and Demand. On the supply side, we have construction of new single-family and multifamily housing units. On the demand side, we have household formation. The decade after the GFC (Great Financial Crisis), approximately 15.6 million households were formed in the United States. About 8.5 million single-family homes and 3.4 million multifamily units were completed during the same period. This means the U.S. is short about 3.7 million homes.

This shortage of housing supply is the primary reason why the cost of housing will not come down anytime soon. There are many other factors, such as heightened mortgage interest rates and demographic changes, all of which contribute to this imbalance. As long as this imbalance exists, a widespread housing market crash does not seem likely.

It’s clear that many prospective homebuyers are entering an expensive market. What are some things that they can keep in mind to remain hopeful?

I can’t predict the future, but if inflation numbers continue to fall, there might be some relief on the mortgage interest rate this year as the Federal Reserve starts to lower rates.

According to the National Association of Realtors (NAR), the median existing home price rose 4.4% in 2023. It reached a year-over-year record high of $389,800. While the potential interest rate decrease will help make purchasing a home more affordable, the increase in demand for lower cost mortgages will likely drive up demand for homes and cause home prices to increase again.

What do you believe are the contributing factors for cities where home prices are drastically falling?

Between March 2022 and June 2023, the Federal Reserve raised the Federal Funds Rate 11 times. This sidelined many would-be homebuyers from buying a home. The increased interest rate also locked in many would-be home sellers in their low interest rate mortgages and their existing homes. These two factors caused an artificially low level of activity and resulted in lower prices in some markets. However, as long as new construction units and existing homes for sale do not increase meaningfully, prices are likely to continue to march upward.

Joseph Nicholson, Ph.D.

Associate Professor, Accounting and Finance
Montclair State University

For those who might be anticipating a repeat of the 2008 housing market crash, are their fears valid?

While the market experienced significant valuation increases over a year and a half period following the COVID lockdown, it is not close to the dramatic valuation increases experienced between 2001-2006. There will not be a crash, but the market does need a valuation adjustment. Prices should decline by another 15%-20%, and interest rates will not be adjusted down until that happens. The Great Recession experienced value declines of around 50% in some areas.

It’s clear that many prospective homebuyers are entering an expensive market. What are some things that they can keep in mind to remain hopeful?

I don’t want to lead people astray; therefore, I would advise people to stay out of the market until the Housing Affordability Index begins to increase and is well above 100. By entering the market now, prospective buyers are keeping demand and, therefore, prices high.

What do you believe are the contributing factors for cities where home prices are drastically falling?

Prices tend to be more volatile in larger, major cities due to higher population densities and constrained supply. We have seen greater price increases in these types of cities, and the downward price adjustments should be greater than in other areas moving forward. 

Responses have been slightly edited for clarity and concision.

Ways to save on your housing expenses

  • Protect your home (and your finances). Be sure to weigh your options and select a home insurance policy best suited to your needs. While it can be a difficult decision, skipping out on this important step could cost you hundreds or even thousands down the line.
  • Put away some extra money. By opening up a savings account, you’ll be able to earn interest and easily contribute towards an emergency fund.
  • Apply for a loan. The best mortgage lenders offer various rate quotes and packages to help you achieve your homeownership goals.  

Methodology

FinanceBuzz collected data on the 100 largest American cities by population (according to the U.S. Census).

Factors were compared against each other using a dynamic formula that assigned each city a score of 0-5 relative to every other city. Those factor scores were then weighted to assign each city a final value out of 100, with higher scores indicating cities in greater decline.

For each factor, a weight of 2.0 serves as the baseline, with weights above 2.0 having a more significant impact on a city’s total score and those below 2.0 having a lesser impact. The weights and sources for the individual metrics used are as follows:

Author Details

Josh Koebert Josh Koebert is an experienced content marketer that loves exploring how personal finance overlaps with topics such as sports, food, pop culture, and more. His work has been featured on sites such as CNN, ESPN, Business Insider, and Lifehacker.

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