In the majority of cities, buyers who earn the median income where they live can afford a median-priced home there as well, according to a new study by online loan marketplace LendingTree. Therefore, most households considered middle-class are not being priced out of the housing market.
However, “middle class” can be a broad term that consists of a variety of income levels. A household earning anywhere between two-thirds of the national median income and double that figure is considered middle class (after incomes have been adjusted for household size), according to the Pew Research Center.
LendingTree researchers recently examined housing affordability across the middle-class spectrum by breaking the income range into three subgroups: lower-middle class (those who make two-thirds of the median income), middle-middle class (those who earn exactly the median income), and upper-middle class (those who make double the median income).
The middle-middle class, for example, earns about $450 more a month than the income necessary to pay for a median-priced home in their area, the study finds. An upper-middle-class family earns more than $1,900 more a month than the necessary income. Lower-middle-class families can still afford a median-priced home in 34 of the nation’s largest metros, the study finds.
The metros that are least affordable for the entire middle class tend to be in California. The lower- and middle-middle classes have the most difficulty affording a home in Los Angeles, San Francisco, and San Jose, Calif., the study finds. The study broke down the most affordable metros for the middle class by different levels.
Most Affordable Metros for the Lower-Middle Class
1. Houston
- Median home price: $166,500
- Lower-middle-class income: $41,948
- Likely monthly payment for a median-priced home: $683
- Affordable monthly payment for a lower-middle class family: $979
2. Pittsburgh
- Median home price: $142,100
- Lower-middle-class income: $37,382
- Likely monthly payment for a median-priced home: $583
- Affordable monthly payment for a lower-middle class family: $872
3. Buffalo, N.Y.
- Median home price: $135,000
- Lower-middle-class income: $35,689
- Likely monthly payment for a median priced home: $554
- Affordable monthly payment for a lower-middle class family: $833
Most Affordable Metros for the Middle-Middle Class
1. Houston
- Median home price: $166,500
- Middle-middle-class income: $62,922
- Likely monthly payment for a median-priced home: $683
- Affordable monthly payment for a middle-middle class family: $1,468
2. Dallas
- Median home price: $174,500
- Middle-middle-class income: $63,870
- Likely monthly payment for a median-priced home: $716
- Affordable monthly payment for a middle-middle class family: $1,490
3. Minneapolis
- Median home price: $230,700
- Middle-middle-class income: $73,735
- Likely monthly payment for a median-priced home: $946
- Affordable monthly payment for a middle-middle class family: $1,720
Most Affordable Metros for the Upper-Middle Class
1. Washington, D.C.
- Median home price: $397,900
- Middle-middle-class income: $194,296
- Likely monthly payment for a median-priced home: $1,632
- Affordable monthly payment for a middle-middle-class family: $4,534
2. Minneapolis
- Median home price: $230,700
- Middle-middle-class income: $147,470
- Likely monthly payment for a median-priced home: $946
- Affordable monthly payment for a middle-middle-class family: $3,441
3. Hartford, Conn.
- Median home price: $244,300
- Middle-middle-class income: $146,418
- Likely monthly payment for a median-priced home: $1,002
- Affordable monthly payment for a middle-middle-class family: $3,416
Source: “Homeownership in the Nation’s Largest Metros Is an Achievable Goal for the Majority of the Middle Class,” LendingTree (April 30, 2019)
