Analysis Reveals America’s Most House-Poor Metros Stretching the 30% Rule

The dream of homeownership, a cornerstone of financial security in America, is becoming burdensome for many households. Rising mortgage rates, increasing insurance premiums, and spiraling property taxes have made it challenging to adhere to the traditional 30% rule. This rule suggests that households should allocate no more than 30% of their income towards housing costs. If you’re interested in understanding the state of homeownership in American cities and the struggles of house-poor residents, this article provides valuable insights.

We sourced data from the United States Census American Community Survey (ACS) to identify the most and least house-poor cities, where residents’ housing costs exceeded 30% of their income. We based our analysis on the latest ACS data from 2024 and focused on cities with at least 40,000 owner-occupied housing units. The results, unveiling the top 10 and bottom 10 most house-poor cities, highlight a clear geographic divide and an alarming rate of affordability erosion in certain areas.

• California and Florida cities dominate the list of most house-poor metros, with Los Angeles leading where 47.6% of mortgage owners spend at least 30% of their income on housing.
• The least house-poor metros are mostly in the Midwest and Southeast, with cities like Huntsville (19.4%), Chandler (20.0%), and Chattanooga (21.9%) having a smaller percentage of owners spending above the 30% threshold.
• Affordability is deteriorating fastest in upcoming hot spots like Cape Coral and North Las Vegas. The share of cost-burdened homeowners has surged from approximately 27% to over 42% since 2019.
• In California’s 20 largest cities, 39.4% of mortgage owners now exceed the 30% rule, a significant increase from 37.5% in 2019.

According to 2024 data, cities in California, Florida, and other major coastal markets have the highest percentage of house-poor residents. Homeowners in these markets, such as Los Angeles (47.6%), Chula Vista (45.2%), and Cape Coral (44.3%), spend more than the recommended 30% of their income on housing costs. The CBRE Investment Management study points out that this situation results from price rises in real estate, limited supply amid increased demand, higher costs of capital, and wage adjustments. As a result, the income needed to buy a single-family home has doubled since 2019.

On a positive note, there are cities where a smaller percentage of residents spend above 30% of their income on housing. For instance, in Huntsville, Alabama, only 19.4% of residents fall into this category. Other cities with similar situations include Chandler, Arizona (20%), and Wichita, Kansas (20.3%).

It’s essential to identify the areas where home affordability is improving or worsening. Some markets have seen a sharp increase in the percentage of cost-burdened homeowners from 2019 to 2024. For instance, in Olathe, Kansas, this figure has jumped from 12.2% in 2019 to 21% in 2024. Cape Coral, Florida, and North Las Vegas, Nevada, have witnessed a rise of over 15 percentage points in the number of ‘house-poor’ mortgage owners since 2019. This implies that houses have not only become pricier but existing homeowners are allocating a larger portion of their income towards their homes.

On the other hand, some cities have seen significant improvements in housing affordability. For example, the percentage of cost-burdened homeowners in Chattanooga, Tennessee, decreased from 32.4% in 2019 to 21.9% in 2024. Even though these markets are not necessarily cheap, they are moving towards a more sustainable direction. With its low burden today and significant improvement over time, Chattanooga stands out as an appealing option for homeowners looking to avoid financial strain.

California continues to be a challenging state for homeowners. According to our analysis, the percentage of mortgage owners spending over 30% of their income on housing costs reached 39.4% in 2024, compared to 37.5% in 2019. Some of the most prominent cities in this regard include Los Angeles (47.6%), San Diego (36.1%), and San Jose (34.6%). A U.S. & World News Report interview with Chris Motola, a special projects editor from National Business Capital, attributes the state’s affordability strain to limited developable land, slow housing approvals due to regulations, and high-wage migration patterns.

The 30% rule is a widely accepted guideline for sustainable housing costs, allowing sufficient funds for necessities like emergency funds, healthcare, and transportation. However, our analysis reveals that following this rule is strongly dependent on the city of residence. For instance, coastal and fast-growing Sun Belt metros like Los Angeles, Miami, and Cape Coral, have nearly half of their mortgage holders spending more than 30% of their income on housing. Meanwhile, many parts of the Midwest and Southeast still offer a more sustainable path to homeownership. To create more financial flexibility, homeowners can consider strategies like reducing everyday spending, refinancing high-interest debt, extending loan terms, or leveraging home equity through home equity investments.

We analyzed data from the United States Census American Community Survey (ACS) to determine where residents’ housing costs make up 30% or more of their income, broken down by city. We used the 2024 ACS release and compared it with the 2019 release. We excluded cities with less than 40,000 owner-occupied housing units, analyzing a total of 140 cities.

This article was produced by Splitero and reviewed and distributed by Stacker. You can find the original article here.