Key facts
- Nationally, renters spend an average of 56.5% of their household income on total annual housing costs to purchase a median-priced resale home.
- In Los Angeles, all-in homeownership costs would consume 100% of a local renter's household income.
- Corvallis, Oregon, requires 114% of a renter's household income for homeownership costs.
- Hazard insurance accounts for 6% or more of renter income in four Louisiana metros, reaching 9% in New Orleans.
- Property taxes take a 17% share of renters' median household income in New York-Newark-Jersey City.
- The Burnham-Moores Housing Affordability Index includes 28 small metros where total housing costs are 40% or less of renters' household income.
A new analysis from the Burnham-Moores Center for Real Estate at the University of San Diego's Knauss School of Business reveals that the "all-in" costs of homeownership are consuming a significant portion of renters' incomes nationwide, creating a substantial barrier to buying a home.
The study found that, on average, renters spend 56.5% of their household income on total annual housing costs to purchase a median-priced resale home. This figure varies considerably by metropolitan area, with some locations demanding over 100% of a renter's income.
Los Angeles is highlighted as a market where all-in homeownership costs would consume the entire household income of a local renter. Similarly, Corvallis, Oregon, requires 114% of a renter's income. The analysis unpacks these "all-in" costs to include monthly principal and interest payments, homeowners (hazard) insurance, property taxes, and utilities, excluding maintenance costs and HOA dues.
Geographic variations in insurance and property taxes significantly impact affordability. For instance, hazard insurance accounts for 6% or more of renter income in four Louisiana metros, peaking at 9% in New Orleans due to weather-related risks. In the New York-Newark-Jersey City area, property taxes alone represent a substantial 17% of renters' median household income.
Despite the challenges, the analysis identified five large metro markets where the combined cost of owning a median-priced resale home represents the lowest percentage of renters' household income among the 55 largest metros. Additionally, the index identified 28 smaller metros where total housing costs are 40% or less of renters' household income.