In this article we take a look at the 25 most expensive cities in the US to buy a house. Click to skip ahead and jump to the 10 most expensive cities in the US to buy a house.
Statistically, it is very unlikely that the person reading this article actually owns their own home, especially if they are residing in the United States. The median age of a home buyer in the US is now 47, which is a significant increase over the previous decades. Go back less than 40 years and the age was just 34, showing how owning a home has become more and more impossible for people in the US as time has gone by. In just the 9 years after the financial crash in 2009, the median age had increased by 8 years. In real terms, the US housing prices has increased by 45% in just the last 8 years.
While the recession has been one of the main reasons behind the increase in the median age of purchasing, another factor is student loans. People in the US owe over $1.4 trillion in student loans alone, with interest payments alone eating into their savings. There are tons of stories about people paying off tens of thousands of dollars in student loans, only for the amount to increase, since they only paid off part of the interest, not even denting the principal.
In the larger US cities, which are the focus of this article, home prices have increased drastically, pricing out most people. Meanwhile, home builders have decided to concentrate more on people on the richer end of the spectrum, again leaving out the average Joe being unable to buy his own property. Some of the prices are really obscene; in San Francisco the median home costs over a million dollars. You literally have to be a millionaire to be able to afford the median price of a home; in fact, a multi millionaire because you will still need money to take care of other expenses. There’s a reason why the average salary of homeowners is significantly higher than those who don’t.
Of course, this pricing boom doesn’t only relate to properties, but to rent as well. Rent has increased so much in recent times that people have to spend a far greater percentage of their income on just rent, leaving very little for other necessities or luxuries. In San Francisco, the average rent is around $3,500! This is for a one bedroom apartment, not a mansion. The reason for some of the high prices is that many people are living in places like San Francisco or Manhattan, where due to various reasons, there is limited additional construction and as the population increases, so does the price of the property.
The funny thing is, there is a lot of variance across the United States, with the most expensive places belonging to some of the fastest growing or exclusive cities, while other areas have a lot more to offer in less money. The amount of money you can spend for the same house varies wildly across cities and states. In Detroit, Michigan, for $250,000, you can easily get a property of over 5,400 square feet, while in some of the more expensive cities in our list, you won’t even get 300 square feet. This disparity is in fact why the US is among the 10 countries with the cheapest land per acre for sale.
Of course, all of this was before the coronavirus pandemic, which has changed the way we live for nearly three quarters of a year now, and shows no signs of abating. 40 million people in the US alone lost their jobs, though some of them have regained their jobs as business start opening. However, the virus and the lockdown has crippled the world, and the US, being the worst affected country in the world, has been unable to escape the consequences. Many people are not buying homes even if they can afford them because they are so uncertain of the economic situation with the GDP growth rate of most countries being strongly affected, and not even knowing whether they have job security or not. Many people thought this would lead to a decrease in prices for homes, yet they actually increased in March when the lockdown was being implemented, thus making them even more unaffordable. We will only be truly sure of the impact of the coronavirus pandemic on the housing market perhaps next year.
Like I said before, the prices across the US vary strongly for property. To determine our rankings, we took a look at the median cost of a house in each metropolitan area in the US for both 2019 and 2018 from the National Association of Realtors, and then calculated the average of both rankings to come up with our own. The only issue is, NAR’s data is based on single family home prices. Manhattan has mostly apartments, not single family homes with a backyard and a front yard. New York City’s real estate is fundamentally different from the rest of the country. While a 4,000 square foot house on a one acre plot is a viable option in Houston, it doesn’t even exist in Manhattan. That is why we have also adjusted the rankings to take this anomaly into account. So let’s take a look at the cities where purchasing a home can only be a dream for most of us, starting with number 25:
25. Austin-Round Rock, TX
Median sales price of existing single family homes in 2018: $315,900
Median sales price of existing single family homes in 2019: $329,200
Round Rock is home to Dell, which employs around 16,000 people in the area, and has a high standard of living becoming a major center in Texas for economic growth and has over 20 major employers.