Your ability to own a home is affected by where you live. Even people with modest incomes can afford homes in Decatur, Illinois, the metropolitan area with the nation’s most affordable houses. At the other end of the affordability spectrum is the San Jose, California, metro area, where high incomes are outmatched by stratospheric home prices.
A home is most affordable when it doesn’t cost much more than a year’s pay. Decatur is an affordable market because the median house costs about one and a half times the median annual income. (“Median” is the midpoint, where half of the values or incomes are lower and half higher.) In comparison, there’s San Jose, where a typical household earns a six-figure income but a median single-family house costs about 12 times what a typical household earns.
Every quarter, NerdWallet calculates home affordability for 172 metropolitan areas by comparing the median annual household income and the monthly principal-and-interest payment for a median-priced single-family home.
Most-affordable metro areas
1. Decatur, Illinois
Median home price: $73,000
Median household income: $46,198
Principal and interest payment: $294 (equals 7.6 percent of median monthly income)
2. Cumberland, Maryland-West Virginia
Median home price: $86,200
Median household income: $45,808
Principal and interest payment: $347 (9.1 percent of monthly income)
3. Elmira, New York
Median home price: $100,800
Median household income: $51,269
Principal and interest payment: $406 (9.5 percent of monthly income)
4. Binghamton, New York
Median home price: $103,000
Median household income: $51,360
Principal and interest payment: $415 (9.7 percent of monthly income)
5. Peoria, Illinois
Median home price: $114,800
Median household income: $57,090
Principal and interest payment: $463 (9.7 percent of monthly income)
Least-affordable metro areas
1. San Jose-Sunnyvale-Santa Clara, California
Median home price: $1.37 million
Median household income: $110,040
Principal and interest payment: $5,533 (60.3 percent of median monthly income)
2. Honolulu, Hawaii
Median home price: $775,500
Median household income: $80,513
Principal and interest payment: $3,125 (46.6 percent of monthly income)
3. San Francisco-Oakland-Hayward, California
Median home price: $917,000
Median household income: $96,677
Principal and interest payment: $3,695 (45.9 percent of monthly income)
4. San Diego-Carlsbad, California
Median home price: $610,000
Median household income: $70,824
Principal and interest payment: $2,458 (41.6 percent of monthly income)
5. Los Angeles-Long Beach, California
Median home price: $545,500
Median household income: $65,950
Principal and interest payment: $2,198 (40 percent of monthly income)
