While recent economic conditions have caused greater alarm, the gap between the rates of growth for incomes and home prices is not a new phenomenon. The rate of growth of median income has lagged behind that of home prices for at least the last two decades.
Household incomes cannot keep up with increasing home prices
The gap between wage growth and home price growth may be most severely felt in areas where home prices are increasing the fastest. States in the West have shown the most rapid increases in housing costs in recent years, led by Idaho, where the median home price is up by 110% just over the last five years. Other fast-growing Western states like Utah, Arizona, Washington, and Nevada have also seen rapid home price increases over that span.
Home prices in the West are growing the fastest
Many of these Western states are now among the national leaders in home price-to-income ratio. The ratio of median home price to median income is one indicator for housing affordability. Nationally, that ratio is 4.7, but the top 10 states—nine of which are found in the West—currently have ratios of 6.3 or greater. The top states are Hawaii (9.4) and California (8.9), two of the states with the highest home prices and long-running issues with affordable housing. And at the local level, some California metros exhibit even starker ratios, with the top five most expensive large metros in the U.S. all being located in the Golden State.
Western states and Hawaii have the highest home price to income ratios
Data on household income and spending are from the U.S. Census Bureau and median home values are from Zillow. To identify cities with the highest and lowest home price-to-income ratios, researchers at Construction Coverage divided the Zillow Home Value Index by median household income in each location. Researchers also calculated the five-year change in home price.
Here are the U.S. cities with the highest price-to-income ratios.
Small and midsize cities with the highest home price to income ratios
15. Portland, OR
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- Home price-to-income ratio: 7.3
- Median home price: $558,685
- Median household income: $76,231
- 5-year change in median home price: +32.0%
- Mortgage holders spending >30% of income on housing: 29.7%
14. Denver, CO
Photo Credit: Nicholas Courtney / Shutterstock
- Home price-to-income ratio: 7.5
- Median home price: $568,178
- Median household income: $75,646
- 5-year change in median home price: +47.3%
- Mortgage holders spending >30% of income on housing: 29.0%
13. Washington, DC
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- Home price-to-income ratio: 7.6
- Median home price: $698,414
- Median household income: $92,266
- 5-year change in median home price: +22.8%
- Mortgage holders spending >30% of income on housing: 25.2%
12. Austin, TX
Photo Credit: Ryan Conine / Shutterstock
- Home price-to-income ratio: 8.0
- Median home price: $601,313
- Median household income: $75,413
- 5-year change in median home price: +77.8%
- Mortgage holders spending >30% of income on housing: 27.9%
11. Seattle, WA
Photo Credit: Jeremy Janus / Shutterstock
- Home price-to-income ratio: 8.5
- Median home price: $875,450
- Median household income: $102,486
- 5-year change in median home price: +45.6%
- Mortgage holders spending >30% of income on housing: 25.9%
10. Boston, MA
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- Home price-to-income ratio: 8.8
- Median home price: $697,690
- Median household income: $79,018
- 5-year change in median home price: +26.9%
- Mortgage holders spending >30% of income on housing: 29.6%
9. San Diego, CA
Photo Credit: Sean Pavone / Shutterstock
- Home price-to-income ratio: 10.1
- Median home price: $864,662
- Median household income: $85,507
- 5-year change in median home price: +59.2%
- Mortgage holders spending >30% of income on housing: 35.7%
8. Miami, FL
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- Home price-to-income ratio: 10.1
- Median home price: $435,121
- Median household income: $42,966
- 5-year change in median home price: +29.2%
- Mortgage holders spending >30% of income on housing: 47.1%
7. Anaheim, CA
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- Home price-to-income ratio: 10.5
- Median home price: $796,098
- Median household income: $76,075
- 5-year change in median home price: +44.6%
- Mortgage holders spending >30% of income on housing: 39.5%
6. New York, NY
Photo Credit: Victor Moussa / Shutterstock
- Home price-to-income ratio: 10.5
- Median home price: $728,404
- Median household income: $69,407
- 5-year change in median home price: +21.4%
- Mortgage holders spending >30% of income on housing: 41.2%
5. Long Beach, CA
Photo Credit: Ingus Kruklitis / Shutterstock
- Home price-to-income ratio: 11.2
- Median home price: $761,094
- Median household income: $67,804
- 5-year change in median home price: +48.6%
- Mortgage holders spending >30% of income on housing: 40.4%
4. San Jose, CA
Photo Credit: Uladzik Kryhin / Shutterstock
- Home price-to-income ratio: 11.2
- Median home price: $1,303,422
- Median household income: $115,893
- 5-year change in median home price: +52.1%
- Mortgage holders spending >30% of income on housing: 31.9%
3. Oakland, CA
Photo Credit: yhelfman / Shutterstock
- Home price-to-income ratio: 11.6
- Median home price: $952,381
- Median household income: $82,018
- 5-year change in median home price: +51.7%
- Mortgage holders spending >30% of income on housing: 38.3%
2. San Francisco, CA
Photo Credit: Bogdan Vacarciuc / Shutterstock
- Home price-to-income ratio: 12.3
- Median home price: $1,522,827
- Median household income: $123,859
- 5-year change in median home price: +28.2%
- Mortgage holders spending >30% of income on housing: 37.2%
1. Los Angeles, CA
Photo Credit: Chones / Shutterstock
- Home price-to-income ratio: 13.6
- Median home price: $913,754
- Median household income: $67,418
- 5-year change in median home price: +49.1%
- Mortgage holders spending >30% of income on housing: 44.4%
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