The Most and Least Affordable Places for First-Time Homebuyers in 2016
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The Most and Least Affordable Places for First-Time Homebuyers in 2016

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Housing in four U.S. counties is so unaffordable that first-time homebuyers would have to spend more than 100 percent of their income to cover their mortgage payment each month.

Residents in Brooklyn (Kings County), New York, on average would need 120.4 percent of their monthly wages to cover a mortgage payment for a home there. That is the most unaffordable housing market in the country on an absolute measure, according to the first-quarter affordability study released by RealtyTrac.

The next most unaffordable markets are Marin County, California, near San Francisco, where residents would need to use 109.2 percent of their wages to purchase a home; Santa Cruz County, California, at 106.9 percent; and Manhattan, New York, at 105.1 percent. The top 20 most unaffordable counties are in three states: California, Hawaii and New York.

“It’s almost absurd,” says Daren Blomquist, senior vice president at RealtyTrac, “that you have to spend more than 100 percent of your income to buy a home.”

Related: Here’s Why So Many Middle Class Americans Can’t Buy a House

RealtyTrac considered a county’s average wages and calculated the mortgage monthly payment using the county’s median home price and the current mortgage rate on a 30-year fixed loan with a 3 percent down payment, a common amount for first-time homebuyers. The mortgage payment also included property taxes, home insurance and mortgage insurance.

In general, the maximum percentage of wages used to pay for a monthly mortgage payment is 28 percent to qualify for a conventional mortgage, says Pava Leyrer, chief operating officer of Northern Mortgage Services. Home loans backed by the Federal Housing Administration or the Department of Agriculture are a bit more lenient at 29 percent, she says.

In the majority of counties analyzed -- 264 out of 457 counties -- homebuyers would have to use more than 28 percent of their wages to make monthly mortgage payments. Nationwide, the average for wages spent on mortgage payments is 30.2 percent, up from 26.4 percent a year ago.

Blomquist noted that homebuyers can make their monthly mortgage payments more affordable by contributing larger down payments to their home purchases.

Related: Prices Are Rising. Why Aren’t There More Homes For Sale?

Nine percent of U.S. markets are unaffordable in historic terms in the first quarter, compared with only 2 percent the same time a year ago.

“We’re way below the bubble in terms of markets that were unaffordable. During the bubble, 99 percent were unaffordable,” says Blomquist. “But if home price growth continues to outpace wage growth, then maybe we’re going down that path again.”

Related: 12 States with the Hottest 2016 Housing Markets

Here are the most and least affordable markets, ranked by the percentage of monthly wages needed to cover a mortgage payment.

Least Affordable Counties

20. San Diego County, California
66.4 percent of wages toward mortgage payment

19. El Dorado County, California
66.9 percent of wages toward mortgage payment

18. Los Angeles County, California
68.9 percent of wages toward mortgage payment

17. Alameda County, California
75 percent of wages toward mortgage payment

16. San Mateo County, California
78.3 percent of wages toward mortgage payment

14. Ventura County, California
79.4 percent of wages toward mortgage payment

14. Queens County, New York
79.4 percent of wages toward mortgage payment

13. Sonoma County, California
79.4 percent of wages toward mortgage payment

12. Honolulu County, Hawaii
80.5 percent of wages toward mortgage payment

11. Santa Barbara County, California
81.6 percent of wages toward mortgage payment

10. Orange County, California
81.7 percent of wages toward mortgage payment

9. Napa County, California
84.3 percent of wages toward mortgage payment

8. Monterey County, California
85.5 percent of wages toward mortgage payment

7. San Luis Obispo County, California
88.1 percent of wages toward mortgage payment

6. Maui County, Hawaii
92.4 percent of wages toward mortgage payment

5. San Francisco County, California
95.3 percent of wages toward mortgage payment

4. New York County, New York (Manhattan)
105.1 percent of wages toward mortgage payment

3. Santa Cruz County, California
106.9 percent of wages toward mortgage payment

2. Marin County, California
109.2 percent of wages toward mortgage payment

1. Kings County, New York (Brooklyn)
120.4 percent of wages toward mortgage payment

Most Affordable Counties

20. Philadelphia County, Pennsylvania
15.3 percent of wages toward mortgage payment

20. Montgomery County, Ohio
15.3 percent of wages toward mortgage payment

19. Ingham County, Michigan
15.2 percent of wages toward mortgage payment

17. Shelby County, Tennessee
15.1 percent of wages toward mortgage payment

17. Oswego County, New York
15.1 percent of wages toward mortgage payment

15. Summit County, Ohio
15 percent of wages toward mortgage payment

15. Lucas County, Ohio
15 percent of wages toward mortgage payment

14. Milwaukee County, Wisconsin
14.6 percent of wages toward mortgage payment

13. Saint Lawrence County, New York
14.3 percent of wages toward mortgage payment

12. Winnebago County, Illinois
14.2 percent of wages toward mortgage payment

11. Racine County, Wisconsin
14 percent of wages toward mortgage payment

10. Trumbell County, Ohio
13.2 percent of wages toward mortgage payment

9. Richmond County, Georgia
12.9 percent of wages toward mortgage payment

7. Cuyahoga County, Ohio
12.8 percent of wages toward mortgage payment

7. Mahoning County, Ohio
12.8 percent of wages toward mortgage payment

6. Saginaw County, Michigan
12.6 percent of wages toward mortgage payment

5. Rock Island, Illinois
12.3 percent of wages toward mortgage payment

4. Bay County, Michigan
11.5 percent of wages toward mortgage payment

3. Clayton County, Georgia
10.1 percent of wages toward mortgage payment

2. Baltimore City County, Maryland
9.2 percent of wages toward mortgage payment

1. Wayne County, Michigan
8.5 percent of wages toward mortgage payment

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