In What Areas are Homes the MOST & LEAST Affordable?

Rising home prices and stagnant incomes are pushing homeownership beyond the reach of middle-class Americans in more cities, a new study finds. 

In 20 of the 100 largest metro areas, a majority of homes on the market are not affordable for middle-income buyers, according to a study released Tuesday by real estate research firm Trulia.

A home is considered affordable, by Trulia's definition, if total monthly costs after a 20% down payment — including mortgage, insurance and property taxes — are less than 31% of a region's median household income. 

Rising home prices and interest rates, combined with modest wage increases, have chipped away at affordability over the past year, says Trulia Chief Economist Jed Kolko. Monthly payments for an average home cost 20% more than a year ago, he says.

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"Affordability is worsening," Kolko says. "Prices are still rising faster than wages and income." 

By historical standards, homes are still relatively affordable as the nation continues to recover from the 2007 housing crash. Nationally, home prices late last year were 20% above their 2011 nadir but 21% below their 2006 peak, according to CoreLogic Case-Shiller Indexes out Tuesday. Interest rates remain low. And buying is cheaper than renting in all of the 100 metro areas, Trulia's study found. 

But since May 2013, the share of affordable homes has declined in 98 of those markets. Only Rochester, N.Y., and Hartford, Conn., had slight increases.

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