Most and Least Affordable Cities for Millennials

July 2, 2015

A recent study showed that people are better off buying than renting in the majority of cities in the U.S. However, for many millennials living in the biggest cities in the country, that dream may never become a reality.

Bloomberg's recently released "Millennial Housing Affordability Index," looked at the median home value of 50 metro areas, the median millennial salary in that area, plus the minimum salary required to buy the average home in each city and found that "the areas that often most appeal to young adults are also the ones where homeownership is the most out of reach."

The most expensive places for millennials to buy are along the west coast, and while 37 cities offer homes cheaper than the minimum required salary, there are larger negative gaps in required salaries than in surplus salaries.

For example, according to the index, the most money the average millennial could save on housing per year is $21,207 in Detroit, Mich., whereas the most expensive city, San Jose, Calif., would leave the average millennial owing an extra $80,162 per year.

The problem is that many millennials "don't have the money for a down payment or can't afford to buy where they want to buy," said Mark Vitner, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. "It's tougher to buy a home in the city." Indeed, in many cities across the country, rising rental costs make saving up to buy a home a struggle for first-time buyers.

Here are the top ten most and least affordable places for millennials to buy a home:

Most Affordable

  1. Detroit, Mich.
  2. Pittsburgh, Penn.
  3. Buffalo, NY
  4. Indianapolis, Ind.
  5. Cleveland, Ohio
  6. Kansas City, MO
  7. Memphis, Tenn.
  8. Cincinnati, Ohio
  9. Birmingham, Ala.
  10. St. Louis, MO

Least Affordable

  1. San Jose, Calif.
  2. San Francisco, Calif.
  3. Los Angeles, Calif.
  4. San Diego, Calif.
  5. Sacramento, Calif.
  6. New York, NY
  7. Seattle, Wash.
  8. Riverside, Calif.
  9. Washington, D.C.
  10. Boston, Mass.

Source: "These Are the 13 Cities Where Millennials Can’t Afford a Home," Bloomberg Business. (June 8, 2015)