Major cities across the US are spending more than 35% of their income on housing, with the worst hit being coastal cities in California like Los Angeles, Long Beach, Oakland and San Diego. High housing costs in these cities have also affected the adjacent inner cities. Other seaside cities with high housing cost include New York and Miami.
US Cities Who Spend the Most of Their Income on Housing
Los Angeles, CA
According to Big City Housing Coalition (BCHC), Los Angeles is one of the most expensive residential areas with an average 44% of income spent on housing on average. This price is caused by its proximity to the beach and demand for beach properties, land cost and people controlled development. There is also not enough space for the number of people who want to live in the area.
Housing expenditure in Miami is said to be 10% more than the national average, however, home ownership is 8% lower than the national average. BCHC puts Miami’s income expenditure on housing at 42%. In recent years, the property customer pool has been dwindling because developers increase house prices. Although property prices have been rising in recent years, incomes have remained stagnant which gives property owners the opportunity to take advantage and concentrate on high-end housing.
According to BHCH figures, 39% of a person’s income goes to housing costs in Detroit. Generally, income in Detroit is low. Although income has remained stagnant for a long time, household rent costs have been increasing fast. New housing developments also target the affluent residents which leaves low income earners having to dig deeper in their pockets. Access to mortgage credit has also tightened in the past few years. Detroit’s millennials are gradually in need of housing, but this has not translated into building reasonably priced housing.
New York, NY
Over the decades, New York has grown into an attractive place where people from all over the world want to live and work. This progress is further boosted by the low level of crime and topnotch social amenities. For both permanent and seasonal residents, demand for apartments and homes are high. Being part of the top global real estate, the demand for housing is high but supply is low due to lack of sufficient land to build upon, zoning policies and the high cost of construction. The rich and global clients have set the bar too high for the average New Yorker to own a house, who spend 39% of income on housing according to the BHCH data.
Causes of the high cost of housing in these major US cities have unique similarities. The cities are very popular and there is high demand for houses. However, developers are unable to keep up due to restriction and to some extent over focusing on high end clients leaving the majority without choice but to spend more on housing. While the elite may not feel the pinch, majority of lower and middle class must bear with the housing burden.