Report: Brooklyn Is America’s Most Unaffordable Place To Buy A House

Brooklyn, NY, is now the worst place in America for home affordability, according to a new report by RealtyTrac (www.realtytrac.com), the nation’s leading source for comprehensive housing data. San Francisco is in second place, followed by Manhattan.

According to the report, a Brooklynite making a median income would need to set aside 98 percent of their salary to pay the monthly mortgage for a average-priced home of $615,000 with a 10% down payment, slightly up from 95 percent, - the affordability level since 2000.  

The report analyzed 475 U.S. counties with a combined population of more than 221 million — accounting for more than 70 percent the total U.S. population — based on three early warning signs of a possible home price bubble: if the market was less affordable in October 2014 than its peak price during the 2005 to 2008 housing bubble; if a market was less affordable in October 2014 than its historical affordability average since January 2000; and if a market had a rising foreclosure rate on loans originated in 2014 compared to loans originated in 2013. 

“Incomes have not grown nearly as fast as home prices,” Daren Blomquist, vice president at RealtyTrac, remarked. “That disconnected home-price growth has been driven by investors and other cash buyers who aren’t as constrained by income.”

In the 475 counties analyzed, buying a median-priced home in October 2014 required 26 percent of median income on average compared to an average of 41 percent of median income in each county’s respective peak month during the housing bubble. The historical affordability average going back to January 2000 for all 475 counties was 28 percent of median income needed to purchase a median-priced home.

“While 99 percent of markets have not returned to the irrational affordability levels during the previous housing bubble, one in five markets have now exceeded their historical affordability norms, which is a strong sign that either a new home price bubble is forming in those markets or that home price appreciation will soon plateau until incomes can catch up,” said Blomquist.