Individuals interested in purchasing a residential property pay close attention to the price variety among different areas of the country. They aim to avoid the most expensive housing markets in the US to get the best deals and maintain a good quality of life.
House prices are mainly increasing due to inflation and are unlikely to drop in the near future. Combined with utilities, transportation, and overall living expenses, some cities in costly states have the most expensive homes in the US.
Lets explore the most expensive housing markets in The United States:
1. Manhattan, New York
Manhattan, New York, convincingly has the most expensive real estate in the US. This town’s residents pay five times higher prices for housing when compared to the national average. Thus, most of this area’s permanent residents are unable to afford a new home.
The median household income in Manhattan is nearly 95,900. For this reason, many families can afford the average monthly rent in this city which is around $5,740. However, the price for a house exceeds $2,743,330, which is exceptionally high compared to some cities in other states.
2. Honolulu, Hawaii
The most expensive housing markets in US include Honolulu, Hawaii, where the city population is drastically lower than New York. Since Hawaii is an island state, all goods are shipped there, increasing the residents’ living costs, including house prices.
The average monthly rent in Honolulu is around $4,150, which is three times more than the US average. A good-sized home costs approximately $1,688,720, and the average household income amounts to $82,000.
3. San Jose, California
Due to the numerous high-paying employment opportunities, young professionals in the tech industry are tempted to relocate to San Jose, California. The household income in this city, $148,900, is two times higher than the American average, enabling residents to live comfortably and afford the necessities.
However, purchasing a home in this area can be challenging because the average price is $1,670,320. Utilities are expensive in San Jose, increasing overall housing costs. For this reason, many residents choose to rent a residential property for a monthly payment of around $3,000.
4. San Francisco, California
The high living costs residents of San Francisco, California face, have given it a reputation as one of the most expensive housing markets in the US. Although most households receive nearly $136,700, which is almost twice the national average, can’t afford buying a new home.
Around 50% of homes in this area are sold for more than $1 million. An average house in San Francisco, California, reaches approximately $1,408,350. The rent here is also high, despite the fat paychecks most residents receive, and it amounts to over $3,860 per month.
5. Orange County, California
With a median household income of over $106,200, Orange County, California, is one of the wealthiest areas in the United States. Its population is over 3 million, and many famous people live there. However, these factors have contributed to its very costly housing market.
The average home in Orange County, California, costs $1,383,710, and the average rent is $3,110, which is two times higher than the national average. In addition to high housing costs, utilities, and groceries are very expensive, making families struggle to make ends meet every month.
6. Brooklyn, New York
One of the most scenic areas in the United States, Brooklyn, New York, also has a housing market that is among the most expensive in the country. The cost for an average home in this area reaches nearly $1,376,670.
Although it is more affordable than Manhattan, Brooklyn’s residents are required to pay mortgage costs three times higher than the national average. The average household income is around $73,950, which is lower than the US average. The rent price in Brooklyn, New York, is approximately $3,600.
7. Los Angeles, California
Los Angeles, California, is one of the most heavily populated places in the country. Many wealthy people live, work, and shop here, which contributes to higher-than-national-average living costs and an average price for a house up to $1,248,505.
The housing costs in this place are continuously increasing despite the median household income remaining at $76,135. Residents pay almost 50% more than the US average if they want to rent a property in Los Angeles.
8. Washington, D.C.
Washington, D.C.’s living costs, including transportation, utilities, and housing, are much higher than the national average. If residents want to become homeowners, they must be prepared to spend around $1,129,420.
Housing expenses in this area, like mortgage and insurance, are over two times higher than the US average. The median household income amounts to approximately $101,030, and the average rent price is around $2,600.
9. San Diego, California
Just like all the other Californian cities mentioned here, San Diego offers beautiful outdoor scenery and enjoyable weather year-round but has an expensive housing market. The average price for a house in this town is $1,128,110.
Thankfully, the median household income in San Diego California is generally high, around $100,010, enabling them to afford all necessities. If they choose to rent over owning a residential property, they will be required to pay approximately $3,200, which is almost three times higher than the US average.
10. Lake Havasu City, Arizona
Although it holds the last place on this list, Lake Havasu City in Arizona has one of the most expensive housing markets in US. A major part of the town’s population are retired individuals who want to purchase a home in this area, spend time in nature and enjoy the quiet atmosphere.
However, the average price for a house in Lake Havasu City is $1,103,400, which is too much for many people to afford. Even though the median household income is $64,027, the average monthly rent, which is $1,900, is still too high.
Factors Contributing to the Housing Market Costs
Various factors contribute to particular areas’ housing market costs. While inflation and interest rates are some of the most common ones, here is how salaries and property prices determine if a market is overly expensive or reasonably priced.
Median Household Income
This indicator determines if a family can afford necessities and live a comfortable life or if they experience poverty due to low household income. It measures the amount of money the household possesses to decide if they can afford to buy a residential property in a specific area.
- Poverty Rates: A higher number of poor people in an area results in reduced housing demand. Low-income families don’t always have the privilege of experiencing housing affordability. Instead, their housing expenses are higher than those with higher median incomes.
- Employment Rates: Unemployed residents can’t afford to purchase a new house, decreasing the demand. However, when an area has high employment rates, housing prices go up.
Average Rent Price
Renting a residential property is often considered the more affordable option than buying. However, the following factors determine how an area’s average rent prices affect the housing market costs:
- Size: Larger apartments or houses are more expensive to rent than smaller ones. However, families often want the commodity of larger spaces, which increases the demand.
- Location: Properties for renting located in the city’s center or in close proximity to significant amenities are more expensive than those in remote areas far away from downtown areas.
Average Home Price
The increased housing supply has raised interest rates and average home prices compared to a few years ago. The higher the cost of a house, the more expensive the housing market within an area. Such expenses depend on these factors:
- Value: Access to public transportation and a location close to schools and residents’ job facilities make a home more valuable and increase its cost. The local housing market ranks these properties as more worthy than ones with limited access.
- Condition: Well-maintained homes are sold for higher prices than those requiring extensive renovations and upkeep. Newer homes in good condition hold a higher value than older ones.
- Neighborhood: The price of a house is often estimated depending on the cost of neighboring estates. Wealthy neighborhoods have some of the most expensive housing markets in the US. Homes in most upscale suburbs and metropolitan areas have similar features, such as square footage and usable space.
