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The U.S. housing landscape of 2013 is almost unrecognizable compared to the current reality, especially when looking at median single-family home prices. In 2013, buying a home for under $200,000 in several major metropolitan areas was possible, but in 2023 that was largely impossible.
Housing budgets have had to increase substantially in the last ten years to keep up with rising living costs. But in many cases, home prices have outpaced housing expenditure growth, while incomes have risen only modestly, putting a strain on affordability.
Zoocasa analyzed the changes in growth in housing expenditures, median incomes, and median single-family home prices over a decade (2013 to 2023) across 17 major metropolitan areas, using data from the U.S. Bureau of Labor Statistics and the National Association of Realtors. We also compared the growth in housing budgets to those of transportation and food, the second and third-largest expenditures, to identify which costs strain budgets most.
Affordability Pressures Tighten as Housing Expenditures Outpace Income Growth
Affordability pressures have grown across the country, and one big reason for this may be stagnant income growth. Nationally, the annual median income has increased by 37% from 2013 to 2023, according to the U.S. Bureau of Labor Statistics, but average annual housing expenditures have increased by 48.3%. The national median home price has risen even more dramatically, with a 98.9% increase from $196,900 in 2013 to $391,700 in 2023.
Even in metropolitan areas with higher incomes, like San Francisco and Seattle, income growth lags behind single-family home price growth. In San Francisco, the annual median income grew by 47.9% in ten years to $72,050—one of the highest in the country. But during the same period, median single-family home prices grew by 85.4% to $1,251,000. Higher home prices mean larger mortgage and down payments, forcing homebuyers to allocate more of their budget to housing. In 2013, the average annual expenditure on housing in San Francisco was $25,663, but by 2023 that amount soared by 64.1% to $42,109. The average percentage of income spent on housing in San Francisco is the highest among all 22 analyzed cities by the U.S. Bureau of Labor Statistics, with 38% spent on housing annually.
In 12 out of 17 metropolitan statistical areas analyzed, average annual housing expenditures increased faster than annual median incomes, indicating a growing affordability gap. Additionally, in every metropolitan area analyzed, median single-family home price growth far outpaced average housing expenditure growth. This suggests that for many people, budgets cannot keep up with the rising cost of housing, leading some to downsize or opt for renting rather than owning.
However, rising costs are impacting some cities more than others. Phoenix and Miami experienced the largest increases in housing expenditures, at 67.7% and 64.5%, respectively, while their median home prices also increased by over 100% from 2013 to 2023. Meanwhile, median incomes in Phoenix and Miami only increased by 38.1% and 48.8%, respectively, making homeownership less accessible. Those in Miami also spend the third-highest percentage of their income on housing at 37.4% annually.
In contrast, homeownership may be more accessible in Washington D.C. and Houston because housing expenditures increased by less than 20% in ten years. At the same time, median incomes grew faster—27.7% in Washington D.C. and 30.3% in Houston. This may ease financial strain for homebuyers in Washington D.C. and Houston, particularly in Houston, where residents spend less than the national average of their income on housing.
Rising Costs Are Impacting Consumer Budgets Across the Board
As much as housing expenditures have soared, consumer spending on transportation and food in some cities even exceeds that of housing, pointing to a wider economic problem.
In 12 out of 17 metropolitan areas, like Atlanta, Chicago, and New York, food expenditures increased more than housing and transportation. In just four metropolitan areas, including Detroit and Boston, housing expenditures experienced the largest increase of the three categories. Miami and Los Angeles were the only cities where transportation expenditures experienced the highest growth among the three categories.
On a national level, housing expenditures increased the most from 2013 to 2023 with a 48.3% increase but were closely followed by food expenditures with a 46.9% increase. As costs in all categories are rising, prospective homebuyers may have to prioritize their needs to budget accordingly for mortgage payments and other housing costs. This may mean eating out less or commuting to work in order to reallocate funds toward housing expenses.
Alternatively, prospective homeowners may find opportunities in cities like Minneapolis and Dallas, where expenses have risen only modestly in ten years. Both cities have median home prices below the national median and have experienced annual median income growth outpacing housing expenditure increases, providing homebuyers with improved financial flexibility.
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The post The Real Cost of Living: How U.S. Housing Budgets Stack Up Against Home Price and Income Growth appeared first on Zoocasa Blog.
