Young families can only afford to buy a house in 4 US cities: where exactly and for how much

As the cost of homeownership doubled year-over-year, the first-home-buying market has become out of reach for most Americans in all but four major US cities, according to a recent study published by real estate website Point2. CNBC.

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These towns:

• Detroit
• Tulsa, Oklahoma
• Memphis, Tennessee
• Oklahoma City

Starter homes are usually considered the first home a family can purchase, so they tend to be smaller and cheaper than other homes for sale. But due to the cost of home ownership, a starter home becomes a dream.

For the purposes of the Point2 analysis, starter homes are those that rank in the bottom third of all homes available in a given market. To measure affordability, the study follows the general personal finance rule that a mortgage payment should not exceed 30% of a homeowner's gross monthly income.

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Here's a closer look at four cities where starter homes are actually available for those earning an average income in the area.

1. Detroit

Average annual income: $ 25 004.

Income needed to buy a starter house: $ 19 103.

Average Starter House Price: $ 48 129.

2. Tulsa, Oklahoma

Average annual income: $ 35 039.

Income needed to buy a starter house: $ 29 521.

Average starting home price: $ 95 481.

3. Memphis, Tennessee

Average annual income: $ 30 093.

Income needed to buy a starter house: $ 27 966.

Average starting home price: $ 87 174.

4. Oklahoma City

Average annual income: $ 37 211.

Income needed to buy a starter house: $ 37 071.

Average starting home price: $ 126 442.

Why the cost of a starter house has risen

In addition to the chronic housing shortage that preceded the Covid-19 pandemic, supply restrictions and rising building material prices have fueled house prices, according to Lawrence Yun, chief economist for the National Association of Realtors.

“And when house prices rose by almost 30%, we know for sure that people’s incomes did not increase by 30%,” he says.

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The market is likely to stay on this pricing path, at least until mortgage rates fall and home supply matches demand, Yun says. Unfortunately for potential home buyers, housing construction has slowed down recently due to economic uncertainty.

“The starter home market has been very challenging over the last 20 years,” Yoon says. “This has created a social divide between homeowners and non-owners who simply feel like they can’t catch up.”

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