The least affordable housing markets aren’t where you think

Bloomberg Opinion — Where is housing least affordable in the U.S.? The most cited measure was long the National Association of Realtors’ affordability index, which tracks whether median-income families can qualify for mortgages on median-priced homes.

According to that, the least affordable market as of 2016 was San Jose-Sunnyvale-Santa Clara (aka Silicon Valley) in Northern California, followed by Anaheim-Santa Ana-Irvine in Southern California (aka Orange County) and San Francisco-Oakland-Hayward just to Silicon Valley’s north.

Recently the NAR has shifted to an affordability distribution score that measures the percentage of for-sale homes in an area that a family with a median income can afford: In that, the Los AngelesLong Beach-Anaheim metropolitan area (yes, they group Los Angeles and Orange County together for one measure but not the other) was least affordable as of September, with neighboring San Diego-Carlsbad and Oxnard-Thousand OaksVentura in second and third, San Jose fourth, and San Francisco and Honolulu tied for fifth.

The real estate site Zillow, meanwhile, has a mortgage affordability index that as of September ranked San Jose worst for affordability, followed by nearby Santa Cruz and San Francisco and then the Los Angeles area.

Hey, but what about renters? They’re in the minority among Americans, with 64.4 percent of U.S. housing units occupied by owners in the third quarter of 2018, according to the Census Bureau’s latest homeownership report. In metropolitan Los Angeles and New York, though, renters account for 52.7 percent and 51.2 percent of households respectively.

They also make up more than 40 percent of households in several other big metro areas, including San Francisco, San Jose, Orlando, Miami and San Diego. Also, renters tend to be poorer than homeowners are. The median income of renter households was an estimated $38,944 last year; for homeowner households, it was $75,876. The people for whom housing affordability is the most pressing issue would thus seem to be renters, not owners.

Zillow does track rental affordability, too. But I’m going to go with the Census Bureau’s median gross rent as a percentage of household income, in part because it compares rents to renters’ incomes, not everybody’s. This offers an interestingly different perspective.

Those aren’t all expensive California glamour spots. Of the four large U.S. metropolitan areas with the lowest median household incomes, in fact, three (New Orleans, Tucson and Tampa) made it onto this chart. Miami and Orlando are also in the bottom 10 for income out of the 53 metropolitan areas with 1 million people or more; Rochester is 12th from the bottom.