Property prices and living costs push young buyers out of top housing markets
Despite some improvements in affordability, there are still some cities where young buyers need six-figure salaries to afford a home due to high property prices, mortgage rates, and other costs.
A new study by Evernest examined 50 cities, looking at factors like property prices, mortgage rates, property taxes, and average salaries. It found that, despite improving affordability in some places, homeownership remains out of reach for many younger buyers due to sky-high costs and other challenges.
New York was at the top of the list as the hardest city for young people to buy a home. With property prices averaging $17,732 per square meter in the city center, and the cost of living pushing $1,643 a month, young buyers need more than just a high salary—they need six figures. The city's affordability index hit 361.99, making it the toughest market for young buyers.
San Francisco followed close behind, with an affordability index of 294.64. Even though salaries in the city are high, averaging $7,394 a month, the cost of living and steep home prices—averaging $11,737 per square meter in the city center—make it extremely difficult for young buyers to purchase a home.
San Jose took third place, with an affordability index of 239.09. Despite high wages in the tech-driven city, young buyers are still struggling. With an average property price of $10,269 per square meter outside the city center and an average salary of $6,949, many are finding homeownership a distant dream.
Boston ranked fourth with an affordability index of 236.42. High property taxes (1.5%) and property prices averaging $11,536 per square meter make it challenging for young people to buy, despite an average salary of $5,852. The situation isn't much better in San Diego, which came in fifth with an index of 200.50, with property prices around $9,295 per square meter in the city center.
Washington, DC, ranked sixth, also demands a hefty income for homebuyers. With property prices at $9,804 per square meter and a high cost of living, young Americans need significant earnings to afford a home in the nation's capital.
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The study also highlighted that while home prices may have started to stabilize or decline in some markets, the overall affordability challenge remained, especially in cities like Los Angeles, Seattle, and Chicago.
Los Angeles, for instance, ranked seventh on the list, with an affordability index of 185.21, requiring buyers to deal with high living expenses and a tough traffic situation, on top of real estate prices.
Even in Chicago, where property prices are lower compared to other top cities, young buyers still face high property taxes and crime rates that make it harder to afford a home. The city ranked tenth, with an affordability index of 148.93.
"It's not just about the cost of the home itself; the broader economic landscape, marked by high living expenses, traffic congestion, and crime rates, further complicates the decision to buy,” a spokesperson from Evernest said. “Addressing affordability is not only about lowering costs but also about improving the overall quality of life in these cities, making them more livable and sustainable for the next generation of homeowners."
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