If you have ever wondered whether your city is working for or against you when it comes to housing costs, a new report has some answers and they may surprise you.
Realtor.com just graded the 100 largest metro areas in the country on housing affordability and the pace of new home construction. The results show just how wide the gap has become between the most and least affordable places to live.
Who Came Out on Top
Des Moines, Iowa earned the top spot with an A+ grade. Right behind it were Raleigh, North Carolina; Columbia, South Carolina; Houston, Texas; and Indianapolis, Indiana.
Notice anything? Most of the highest-ranked cities sit in the Midwest or the Sun Belt. That is not a coincidence.
Who Ranked at the Bottom
Los Angeles came in last with an F. Just above it were Providence, Rhode Island; New York City; Honolulu; and Boston. Higher-cost coastal cities dominated the bottom of the list.
Why Some Cities Do Better
Joel Berner, senior economist at Realtor.com, explained what sets the top-ranked cities apart. Local governments in those areas make it easier and faster to build new homes.
“They have local government facilitating new projects, not getting in the way, not having really restrictive zoning laws, having quick permitting processes,” Berner said.
Strong job markets and plenty of available land also play a big role. Berner noted that those cities are “incentivizing builders to produce dense urban housing as well as the kind of suburban developments that developers have been working on for a number of years.”
The Bigger Picture
The report lands at a tough moment for housing nationwide. The U.S. is dealing with a shortage of more than 4 million homes, the result of years of underbuilding, according to Realtor.com.
Builders are feeling it from both directions. “Their costs are going up, whether it’s materials, labor, or the cost of regulation,” Berner said. “And on the demand side, they’re seeing depressed buyer activity because of high mortgage rates and low buyer affordability.”
Berner said the rankings were designed to capture not just where things stand today, but where they might be heading. “It’s really a balanced look at the present and the future for how things are affordable now and how they might be affordable in years to come,” he said.
For anyone thinking about a move, whether to be closer to family, to stretch retirement savings, or simply to find a fresh start, knowing which cities are building and which are stuck may be worth keeping in mind.
