The most unaffordable place to live in the U.S. is not San Francisco or Manhattan. It’s Brooklyn.
A person earning the average salary in Brooklyn cannot afford the average home there — even if he could spend his entire salary (and then some) on housing, according to a survey released on Thursday by real-estate firm RealtyTrac, which looked at home sales price data in 417 of the most populous counties in the U.S. as well as average wage data from the Bureau of Labor Statistics. The second and third most unaffordable places in America are Marin County, Calif. and Santa Cruz, Calif. — both of which would also require the average wage earner to spend his or her entire salary and more to buy the median home in the area.
In each of these three cases, many people — priced out of the Manhattan, San Francisco and San Jose — are moving from the pricey city center to Brooklyn, Marin County and Santa Cruz, respectively, which is pushing prices there up, says Daren Blomquist, vice president of RealtyTrac. Meanwhile, wages in those counties aren't keeping pace with the home price appreciation, which makes these three areas the most unaffordable in the nation for residents looking to buy. (Note that the average home prices in Manhattan, San Francisco and San Jose are still higher than in Brooklyn, Marin and Santa Cruz, but so are the wages.)
10 most unaffordable places to live in America
| County/area | Percentage of average wages required to buy the median home in the area |
| Brooklyn, N.Y. | 121.70% |
| Marin County, Calif. | 118.10% |
| Santa Cruz, Calif. | 113.50% |
| San Francisco, Calif. | 94.60% |
| Maui, Hawaii | 92.80% |
| San Luis Obispo, Calif. | 90.40% |
| Napa, Calif. | 86.90% |
| Monterey, Calif. | 84.50% |
| Queens, N.Y. | 83.60% |
| Sonoma, Calif. | 82.10% |
Source: RealtyTracMore:New York Luxury Real Estate Market Could Benefit from Brexit
Roughly one in five markets are unaffordable, meaning that buying a median-priced home was less affordable in those places than the historically normal level for that county going back to the first quarter of 2005.
Across America, the average wage earner would need to spend just over 35% of his or her income to afford the median home in the area. Though this figure is higher than the government recommends, it is still far less than Brooklyn, Marin County and Santa Cruz.
The U.S. Department of Housing and Urban Development says a maximum of 30% of your income should be spent on housing or you risk having “difficulty affording necessities such as food, clothing, transportation and medical care.”
Just because these three markets are unaffordable for residents doesn’t mean people aren’t buying there: For example, there were more homes sold in the first quarter of 2016 in Brooklyn than in the same quarter a year prior — and for higher prices, according to real-estate firm Douglas Elliman. “The Brooklyn housing market continued to outperform all other boroughs in New York City. The market remained fast paced with rising sales,” it said, “and rising sales prices.”
Overall, however, affordability is improving due to “a combination of slowing home price appreciation and accelerating wage growth, along with falling interest rates,” Blomquist says. Indeed, the average interest rate on a fixed-rate 30-year mortgage fell 37 basis points from a year prior, annual wage growth was up slightly, and home price appreciation slowed compared to a year prior in more than two in three counties.