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With historically high mortgage rates and elevated home prices, the median home price in the U.S. is now 50% higher than the affordable home price. The result: Aspiring homeowners in many U.S. urban hubs can no longer buy what they could last year. That diminished buying power is resulting in sacrifices when it comes to living space, according to Point2, a Yardi Systems division covering real estate trends and news, with buyers in 61 large cities now able to afford less living space than a year ago.
Looking at year-over-year differences in affordability and living space in the 100 largest cities in the U.S. Point2 found homebuyers are sacrificing up to three bedrooms' worth of square footage in their dream homes in some locales. Homebuyers in Detroit, Tulsa, Okla., and Wichita, Kan., were the biggest losers. But for some cities, there's a silver lining.
For example, potential buyers in Memphis, TN, can afford 164 sq.ft. more than in 2022. In fact, the price per square foot is just $120, as opposed to more than five times this amount in other large cities. Notably, the Home of the Blues is among the very few big cities where the affordable home price is larger than the median home price (alongside Fort Wayne, IN, Detroit, Cleveland, and Toledo, OH).
Other lucky homebuyers who could now afford more than 100 sq.ft. than what they did last year are in Buffalo, NY (161 sq.ft.), Boise, ID (144 sq.ft.), North Las Vegas, NV (131 sq. ft.), Jacksonville, FL (121 sq.ft.), and Arizona’s Mesa and Glendale (both 101 sq.ft.).
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