2023 Study: Majority of Renters Priced Out of Homeownership in 78% of All US Metros

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Key Findings

  • 63% of renters across the biggest U.S. metropolitan areas are priced out of home ownership (up from 61% last year)
  • The majority of renters can’t afford to own a home where they live in 205 out of 260 metros (78%)
  • At least 90% of renters are priced out of home ownership in 16 American metro areas, nine of which are in California
  • In two metropolitan areas, Prescott, AZ and San Luis Obispo-Paso Robles, CA, less than 1% of renters would be able to afford buying and owning a median-priced home
  • Kalamazoo-Portage, MI, Jackson, MI, and Johnstown, PA are the only three metros where more than 80% of renters could afford to own a home

In 2022, a study by Porch, a nationwide home-service company, found 61% of renters in the U.S. were priced out of homeownership, meaning they were not able to afford to buy and own a home in the same city where they rented. 

In 2023, applying that study’s same methodology to the most recent home-owner data resulted in an estimate of 63%. In other words, today, nearly two-thirds of renters can’t afford to buy a home in the metro where they live.

To gain a better understanding of this huge number, we examined housing affordability by comparing renter incomes to home prices using the most recently available data for 260 metropolitan areas in the United States.


Home Prices Have Dropped, Why Aren’t Homes More Affordable?

home ownership study porch hireahelperEven though home prices have been falling for the better part of last year and then continued their decline in 2023, housing affordability hasn’t improved. In fact, things have gotten worse for prospective homeowners over the last year. 

At the end of last year, the National Association of Realtors’ Housing Affordability Index reached its lowest point since 1965. It hasn’t been this hard for a family with an average income to qualify for a mortgage loan on an average-priced home in over six decades.

Why hasn’t a drop in home prices led to greater affordability? 

For starters, mortgage interest rates are at 6.65% according to Freddie Mac — the highest they’ve been since the Great Recession. This means potential mortgage repayments for buyers would be a lot higher than they would have been even just a few years ago.

 

“It hasn’t been this hard for a family with an average income to qualify for a mortgage loan on an average-priced home in over six decades.”

 

Secondly, there aren’t enough affordable starter homes. In part, that’s because there are simply not enough homes for sale in general after a pandemic buying frenzy. On top of that, there is simply put, a lack of cheap new homes. Roughly 63% of all U.S. homes were selling for over $400,000 by the end of 2022.

Finally, there’s the pervasive issue of inflation and the increasing cost of goods, services, and rent, leaving less money in Americans’ pockets. Despite dropping to 6.5% in recent months, it’s still way higher than the pre-pandemic 1-2% rate.

Now that we know more about why housing is less and less affordable, let’s get into where all this leaves American renters wanting to buy a home in 2023.

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Further Out of Reach: The Majority of Renters Can’t Afford To Own a Home in 205 out of 260 Metros

To estimate the percent of renters priced out, we assumed a scenario where a first-time buyer put down 6% of the home value, obtained a 30-year fixed-rate mortgage with a 6.65% interest rate (an average rate), and aimed to keep mortgage repayments to a maximum of 30% of the household income, as per the famous Housing and Urban Development guideline.

 

“…in two major U.S. metropolitan areas, the share of renters priced out of home ownership is a staggering 99%!”

 

With current income levels and home prices, this scenario is completely unattainable for the majority of renters in 205 out of 260 metropolitan areas in the United States. That’s in nearly eight out of the ten (78%) most populated areas in America where renters have no realistic chance at home ownership.

 

In the Porch study from 2022, there were 184 metros where home ownership was unaffordable for 50% or more renters living in them. 

This overall increase seems to suggest the affordability crisis isn’t just deepening in areas already struggling with affordable homes, but is actually expanding to more metropolitan areas across the country.

Mission Impossible: In Two Metros, Home Ownership Is Unachievable for 99% of Renters   

Last year’s study uncovered 13 major U.S. metro areas where at least 90% of renters wouldn’t have been able to afford home ownership based on their income. This year, there are 17 of them!

What’s different about this year’s findings, however, is that in two major U.S. metropolitan areas, the share of renters priced out of home ownership is a staggering 99%!

Those areas are San Luis Obispo-Paso Robles, CA and Prescott, AZ, where the home prices are prohibitively high to be affordable for the absolute majority of people who rent in these areas. Homes in San Luis Obispo and the area being unaffordable is nothing new, but affordability dropping in Arizona and Prescott, AZ specifically is something that’s started happening recently, according to local reports.

 

Of the 17 places in the U.S. where the income of 90% of renters would prevent them from being able to afford a home, nine are in California with cities like Los Angeles (94.3%), Salinas, CA (92.9%) and San Diego (92.6%) all with an appearance on the list.

Hawaii and Colorado each have two metros on this list, but, rather surprisingly, so does Charleston-North Charleston, SC, where some 91.6% of renters are priced out of home ownership. Turns out, housing has been too expensive in the area for a while, but the local government does seem to be stepping in and building more affordable homes, according to reports.

The Modest Midwest: Two Michigan Metros Among Three Most Affordable Places for Renters

Like last year, Johnstown, PA leads the pack in terms of affordability of local housing for those on typical renter incomes. Nearly 90% of people who rent in the area earn enough to cope with the costs of home ownership if they were to buy a home in the area.

The only two other metropolitan areas where owning a home without repayments crosses the affordability threshold of 30% of the household income are in Michigan. Those places are Jackson, MI, (11.9%) and Kalamazoo-Portage, MI (13.3%).

Looking at the 10 most affordable areas for renters looking to jump onto a housing ladder without it breaking the bank, five are either in Michigan or Illinois, while a total of three exist in Pennsylvania.

See All the Data for Yourself

To see how affordable homeownership is for renters in your city or metro, check the table below. 


Methodology, Data Sources, Calculations and Assumptions Made

Income levels of renter households and their % of all households in each metropolitan area were taken from the 2022 release of the Annual Social Economic Supplement to the Current Population Survey, as available via Integrated Public Use Microdata Series (IPUMS). Home prices were taken from Zillow.
% of renters “priced out” was calculated as the percentage of renters in each metropolitan area whose income wouldn’t be sufficient to keep potential mortgage repayments to 30% of gross monthly income (Source: United States Department of Housing and Urban Development). 
Mortgage repayments were estimated using the following assumptions:

Illustrations by Daniel Fishel

2022 Study: How Many Americans Have Moved Due to Climate Change?

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Category: Moving Stories, Neighborhood Advice

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Key Findings

  • Since 2010, over 250,000 Americans have left the counties most at risk for climate change; over 75% of those moves took place in the last five years
  • An estimated 21,000 people relocated to escape climate change in 2020
  • People fleeing climate change were over four times more likely to leave the state (64%) compared to those moving for other reasons (14%)
  • Moves out of counties at risk for extreme heat (45%) and droughts (37%) accounted for 82% of all climate change-related moves in the United States
  • Almost 10 million people were displaced by natural disasters in the United States from 2008 through 2020, according to Global Displacement Database

 

“The great climate migration is already here,” reads the headline of this New York Times article from July 2020. “Climate migration will reshape America,” reads another

True as those statements may ring, many of them are based on projections looking ahead to the next 50-80 years. But how much climate-related migration is already happening in the United States — today?

In our estimate, at least 220,000 Americans moved due to climate change-related events within the last decade, with over 75% of those moves taking place in just the last five years.

This is on top of the 9.9 million Americans who, according to the figures from Global Internal Displacement Database, were forced to leave their homes due to natural disasters like storms, floods, and fires since 2008.

Putting aside any political discussions about whether natural disasters are the direct consequence of climate change, let’s look at the data on climate migration in America in 2022.

Moving for Better Weather OR Fleeing Climate Change? How We Counted ‘Climate Change Moves’

climate change movesWhen filling out the responses that make up the U.S. Census Bureau’s Current Population Survey, a survey that reaches about 60,000 American households each year, Americans who moved within the past year were asked to check off a primary reason for their move. 

Among the listed options on the survey is “change of climate” — which would make for a tidy data point to estimate climate migration, if it weren’t for its lack of definition. As it’s currently written, this answer seemingly applies both to people escaping the increasingly unbearable heat in some parts of the U.S. (e.g., Arizona) and people chasing the heat (e.g., people moving from Maine to Florida).

To avoid conflating these two motives, we focused our analysis only on the counties designated by ProPublica’s report as “most at risk for climate change”. These are areas where listing “change of climate” as a reason for moving, in our view, is more likely to mean  “escaping climate change”, and not more typical fairweather moving data.

 

“The projected number of people leaving the most-at-risk counties is 40,000-50,000 per year. These are moves that otherwise would have no reason to happen.”

 

Then, by analyzing the moves out from these counties using extra data from the American Community Survey (a survey reaching 1-2 million Americans each year), we were able to more confidently estimate the motivations of people who both moved away and listed “change of climate” on the U.S. Census survey as their primary reason for moving.

Ten Years of Climate Change Moves: A Quarter of a Million Moves Since 2010

Since 2010, about a quarter of a million (or ~251,000) Americans who cited “change of climate” as their main reason for leaving originated in counties most at risk for climate change. These are counties that, according to the report by ProPublica, have the highest risk levels for issues such as:

  • Extreme heat
  • “Wet bulb” conditions (i.e., extreme heat plus humidity)
  • Large fires
  • Sea level rises
  • Declining farm crop yields
  • Economic damages due to weather

Based on the shape of the chart above, the year 2017 really stands out. This is likely because several notable hurricanes, including Hurricanes Harvey, Irma, and Maria, all took place that year.

While their impacts were widely felt, they likely affected many counties that were in fact already at risk for climate change; these places are frequently coastal counties where sea levels are predicted to rise, as well as counties in the Southeast, where the climate is getting hotter and hotter each year.

 

“…counties in Texas are the most frequently occuring origin points for climate change-related moves.”

 

Extrapolating from the 2010-2021 trend, presuming current climate change patterns persist at a minimum of their current rates (as they are predicted to do so), our forecast suggests moves made due to climate change will become more common. The projected number of people leaving the most-at-risk counties is 40,000-50,000 per year. These are moves that otherwise would have no reason to happen.

Torrid Texas: Counties in Lone Star State Top List of Climate Move Origins

Of the 460 counties we identified as most at risk for climate change, nearly 47% are in Texas, with the biggest climate risk in most of them (124 out of 203) being “extreme heat”.

Especially given there are so many, counties in Texas are the most frequently occuring origin points for climate change-related moves. Seven out of the top 10 counties with the highest number of people moving out for climate change reasons are in the Lone Star State.

Where to? The Most Popular Destinations of Climate Change Moves

As per our estimated climate change-related moves, people moving to escape recent weather trends are four times more likely to cross state lines as compared to moves made for all other reasons combined (64% vs 14%). This makes sense, as it takes a great distance to reach an area where the climate is substantially different from the place people are leaving behind.

We know that a considerable number of moves due to climate change originate from Texas, but where are they headed?

If they stay in America, it’s Arizona, it turns out. Maricopa County (where Phoenix is located) is the destination for 2% of all climate change moves, with Los Angeles County in California being in a close second, representing 1.9% of all climate change-based moves. (Given Arizona’s famous heat, it’s safe to predict there are many mitigating factors for a destination beyond solely climate change.)

Elsewhere, we see counties around big cities like Seattle (King County, WA), Colorado Springs (El Paso County, CO), and Chicago (Cook County, IL) — all of which received around 1% of all climate change based moves.

At the state level, California edges out other states, receiving 10% of all climate change moves from most at-risk counties. Texas, despite being an origin point of many climate change defectors, still received 9.2% of all new arrivals within the last decade. 

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Consistent with the findings in recent reports, what we’re seeing in our data doesn’t illustrate a mass exodus of Americans from states like Texas, Arizona, or Louisiana toward more climate-temperate regions like the Northeast or the Pacific Northwest. 

Instead, people continue to move into areas like Austin, TX and Los Angeles, CA, where more imminent prospects of a better-paid job and/or comfortable living outweigh the distant risk of climate change-driven disruption to livelihood that will take place decades into the future.

This suggests that whether people realize it or not, they are probably moving for climate-related reasons… yet may be at risk to repeat their actions based on where they are going.

Even still, a Redfin survey from last year found that almost half (49%) of Americans will be factoring climate change and its effects into their deciding where to move next. 

But as the adverse effects of climate change are yet to manifest themselves in ways that would make some of America significantly less liveable, climate change remains a minor consideration in the grand scheme of American internal migration — for now.


Methodology and Sources
Explore data by yourself by looking for climate move stats on each of the 460 most-at-risk counties for climate change we included in our analysis from the following places:
Illustrations by Jiaqi Zhou
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