Residential real estate prices in America continue to rocket upward. One reason is that mortgages are often available below 3%, which historically is unusually low. Also, middle-class and upper-class Americans mostly kept their jobs during the pandemic. Stock market and home equity increases made new homes more affordable to those who wanted to move. Tens of thousands of people left the big coastal cities to move to more modest-sized cities inland. People left places like San Francisco for Boise. The migration drove prices higher in many cities. The new work-from-home culture also allowed many of these relocations to be permanent.

The real estate price run-up has made housing less affordable in many American cities compared with a year ago. Real estate firm Zillow recently released a study about this challenge. Nicole Bachaud, Zillow economic data analyst, commented: “Strong demand and rising prices for homes are overwhelming the ability of low mortgage rates to keep monthly payments down. As prices continue to outpace income gains, affordability constraints will start to slow home price growth.”

Zillow reports that mortgage payments as a portion of income reached 19.4% in June. This was based on a typical homebuyer purchasing a typical home with a 20% down payment and mortgage rate of under 3% on a 30-year fixed-rate mortgage.

The “affordability” formula creates very different results across America’s 50 largest cities. San Jose and San Francisco are two of the most expensive real estate markets in America. The Zillow analysis shows the percentage of income related to mortgage cost needed to buy a home in San Jose is 36.8%. In San Francisco, the figure is 39.3%. In fact, the string of least affordable cities continues on the west coast. Los Angeles is high at 34.0%, and San Diego has a 32.2% number.

The single most affordable city among the top 50 is Birmingham, Alabama, where the rate is 13.5%. This probably is influenced by the fact that Alabama is a relatively poor state. Its median household income is $49,861, which is more than $15,000 below the national figure.

These are the 50 largest cities ranked by affordability:

1. Birmingham, Ala. (13.5%)
2. Oklahoma City, Ok. (13.7%)
3. Louisville, Ky. (14.1%)
4. Indianapolis, Ind. (14.2%)
5. Cincinnati, Ohio (14.5%)
6. Memphis, Tenn. (14.6%)
7. Pittsburgh, Pa. (14.8%)
8. St. Louis, Mo. (15.0%)
9. Cleveland, Ohio (15.5%)
10. Milwaukee, Wis. (15.8%)
11. Kansas City, Mo. (16.0%)
12. Atlanta, Ga. (16.3%)
13. Detroit, Mich. (16.3%)
14. Richmond, Va. (16.3%)
15. Baltimore, Md. (16.6%)
16. Columbus, Ohio (16.8%)
17. Virginia Beach, Va. (16.8%)
18. Raleigh, N.C. (17.0%)
19. Houston, Texas (17.2%)
20. Chicago, Ill. (17.4%)
21. Buffalo, N.Y. (17.6%)
22. Philadelphia, Pa. (17.7%)
23. Hartford, Conn. (17.9%)
24. Minneapolis-St. Paul, Minn. (18.4%)
25. New Orleans, La. (18.6%)
26. Washington, D.C. (18.6%)
27. Charlotte, N.C. (18.8%)
28. Jacksonville, Fla. (18.8%)
29. Nashville, Tenn. (19.5%)
30. San Antonio, Texas (19.5%)
31. Dallas-Fort Worth, Texas (19.8%)
32. Orlando, Fla. (19.9%)
33. Las Vegas, Nev. (20.4%)
34. Phoenix, Ariz. (21.5%)
35. Tampa, Fla. (22.6%)
36. Providence, R.I. (23.1%)
37. Salt Lake City, Utah (24.3%)
38. Denver, Colo. (24.4%)
39. Boston, Mass. (24.8%)
40. Portland, Ore. (24.8%)
41. Sacramento, Calif. (25.0%)
42. Austin, Texas (25.3%)
43. New York, N.Y. (25.4%)
44. Miami-Fort Lauderdale, Fla. (25.6%)
45. Seattle, Wash. (26.8%)
46. Riverside, Calif. (27.5%)
47. San Diego, Calif. (32.2%)
48. Los Angeles, Calif. (34.0%)
49. San Jose, Calif. (36.8%)
50. San Francisco, Calif. (39.3%)

Click here to see which are the most expensive cities in which to buy a home.

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