Housing affordability across the country is especially tough in the nation's urban areas, but in the country's largest metros it's often the suburbs that are the least affordable.
A new Zillow® analysis examines the financial burden of housing payments in urban, suburban and rural parts of the country. Finding a home within their budget is the top concern for both renters and home buyers, according to the 2018 Zillow Group Report on Consumer Housing Trends, but where a home is located can affect that budget, forcing many to accept tradeoffs.
Urban home buyers nationwide have to dedicate a larger share of their income to monthly mortgage payments (26.5%) than buyers in the suburbs or rural areas do – 20.2% and 13.4%, respectively. In urban areas of the Seattle metro, for example, buyers would need to dedicate 40.4% of their income to monthly housing costs, more than they would have to in either the suburbs (27.4%) or rural areas (24.4%). The same hold true in less than a third of the country's largest markets.
The suburbs are the most common destination for today's home buyers, with 48% of all buyers purchasing a home in the suburbs. Yet suburban living is a bigger financial burden for buyers in nearly half of the country's largest markets (17 of the top 35 metros), compared with the costs of urban or rural housing.
In San Diego, for example, paying for a suburban home requires 40.9% of the median household income. Mortgage payments on a rural home would take up 37.3% of the median income, and housing costs for an urban home would require 35% of the typical income.
"Choosing where to live depends on many factors other than strictly financial terms. The size and space of the home, and the nearby amenities have to meet your needs, or come as close as possible," said Zillow Director of Economic Research and Outreach, Skylar Olsen. "How close you can come to those ideal options is always limited by what you can afford, and trade offs are almost always necessary. Finding a home in your budget can be a stressful process, whether you're looking to buy or rent. The difference between an urban core or more distant suburb could make all the difference."
Across the country, renters signing a new lease typically spend more of their income on monthly housing costs than homeowners do, in large part due to still-low interest rates for buyers. The difference between national affordability trends and what is happening in the 35 largest housing markets is more pronounced for renters.
Nationally, rental payments in an urban area require 36.8% of the median household income each month, well above the commonly recommended 30%. Suburban rents are also slightly above that threshold, requiring 31.8% of the median household income. Rural rents nationwide are the smallest financial burden, taking 23.9% of the typical income.
Urban rents in the Dallas market take up a much larger share of income than those in suburban or rural areas of the metro. The financial burden for urban renters exceeds the 30% standard, with the typical urban rent requiring 38.8% of the median income.
However, in about two-thirds of the biggest U.S. housing markets rents are least affordable in the suburbs, where rental supply is slow to grow. Renting a home in the suburbs of Chicago, for example, requires 30% of the median income, more than what would be required in either urban or rural parts of the metro.
Metropolitan | % Income | % Income | % Income | % Income | % Income | % Income |
United States | 13.4% | 20.2% | 26.5% | 23.9% | 31.8% | 36.8% |
New York, NY | 21.0% | 27.4% | 40.0% | 34.8% | 40.8% | 36.9% |
Los Angeles-Long Beach-Anaheim, | 21.9% | 46.2% | 45.3% | 36.0% | 48.6% | 48.0% |
Chicago, IL | 13.4% | 16.4% | 15.3% | 24.5% | 30.0% | 27.9% |
Dallas-Fort Worth, TX | 13.6% | 16.7% | 26.8% | 26.1% | 29.2% | 38.8% |
Philadelphia, PA | 17.9% | 18.7% | 9.8% | 28.0% | 30.5% | 20.9% |
Houston, TX | 13.2% | 14.6% | 18.3% | 28.3% | 29.5% | 29.8% |
Washington, DC | 16.4% | 19.6% | 24.8% | 21.1% | 25.8% | 29.8% |
Miami-Fort Lauderdale, FL | 19.0% | 26.1% | 23.9% | 37.4% | 43.9% | 41.3% |
Atlanta, GA | 11.8% | 15.5% | 24.6% | 21.7% | 26.4% | 35.4% |
Boston, MA | 20.0% | 26.2% | 28.8% | 28.8% | 33.5% | 34.7% |
San Francisco, CA | 50.9% | 35.4% | 44.5% | 43.8% | 35.1% | 39.3% |
Detroit, MI | 18.6% | 15.7% | 4.1% | 25.3% | 27.8% | 15.3% |
Riverside, CA | 13.9% | 29.3% | 18.8% | 23.1% | 38.5% | 27.7% |
Phoenix, AZ | 17.3% | 21.4% | 17.3% | 23.7% | 27.8% | 24.6% |
Seattle, WA | 24.4% | 27.4% | 40.4% | 29.0% | 31.3% | 35.3% |
Minneapolis-St Paul, MN | 15.0% | 17.5% | 16.9% | 22.7% | 26.9% | 26.2% |
San Diego, CA | 37.3% | 40.9% | 35.0% | 39.9% | 43.0% | 39.1% |
St. Louis, MO | 11.9% | 13.0% | 10.4% | 20.5% | 24.1% | 18.9% |
Tampa, FL | 15.7% | 19.5% | 16.7% | 27.3% | 31.9% | 29.5% |
Baltimore, MD | 21.3% | 17.2% | 6.0% | 28.3% | 26.5% | 18.3% |
Denver, CO | 27.8% | 25.8% | 26.7% | 32.7% | 32.7% | 32.4% |
Pittsburgh, PA | 12.3% | 12.8% | 8.7% | 20.8% | 22.9% | 20.9% |
Portland, OR | 24.9% | 26.2% | 28.2% | 29.8% | 31.3% | 31.1% |
Charlotte, NC | 12.0% | 16.8% | 31.4% | 21.3% | 26.5% | 34.5% |
Sacramento, CA | 32.5% | 28.2% | 37.1% | 35.4% | 33.0% | 36.3% |
San Antonio, TX | 20.9% | 14.7% | 11.3% | 31.6% | 27.9% | 24.1% |
Orlando, FL | 20.6% | 21.1% | 11.7% | 31.5% | 32.5% | 26.2% |
Cincinnati, OH | 12.5% | 12.9% | 9.5% | 23.0% | 25.2% | 21.4% |
Cleveland, OH | 16.9% | 13.6% | 6.3% | 30.8% | 27.1% | 19.2% |
Kansas City, MO | 13.0% | 13.6% | 7.2% | 23.3% | 25.9% | 15.9% |
Las Vegas, NV | 20.1% | 24.0% | 16.8% | 26.9% | 28.5% | 25.1% |
Columbus, OH | 14.6% | 14.4% | 11.4% | 25.5% | 26.8% | 20.9% |
Indianapolis, IN | 11.3% | 12.2% | 6.2% | 23.4% | 24.6% | 15.6% |
San Jose, CA | 23.2% | 58.2% | 53.8% | 24.1% | 36.6% | 35.6% |
Austin, TX | 14.0% | 18.4% | 26.4% | 23.9% | 27.2% | 31.2% |
