Why are so many homeowners feeling the squeeze?
More than one in four households in western US states spent at least 30% of their income on housing in 2023, significantly outpacing other regions despite higher average earnings, according to a new analysis by First American senior economist Sam Williamson.
The study examined cost-burdened households across the 50 largest US housing markets, revealing sharp regional disparities in housing affordability. Western markets dominated the list of cities where homeowners face the greatest financial pressures.
“For many homeowners, even a large paycheck isn’t enough to keep pace with the cost of housing,” Williamson said. “In 2023, more than one in four households in the West spent at least 30% of their income on housing, compared with about one in five in the South, Northeast, and Midwest—even though households in those regions earn less on average.”
California cities featured prominently among the most burdened markets, accounting for six of the 14 cities with both high monthly costs and high cost-burden rates. Los Angeles and Riverside faced the heaviest cost burdens, while San Francisco and San Jose residents contended with some of the highest monthly bills.
High home prices emerged as the primary driver of affordability challenges. Elevated property values push up mortgage payments and property taxes, forcing more households beyond the 30% cost-burden threshold that housing experts consider manageable.
The analysis found mortgage principal and interest comprised the largest share of monthly ownership costs at 56% in 2023, followed by utilities at 22%, property taxes at 18%, and property insurance at 8%.
In contrast, markets in the Midwest and parts of the South offered more financial breathing room. Cities including Pittsburgh, Birmingham, Alabama, and Indianapolis demonstrated some of the lowest ownership costs and cost-burden rates nationwide.
The report identified markets with nuanced affordability stories. Orlando and Tampa showed higher cost-burden rates despite lower monthly costs, reflecting areas where incomes lag behind housing expenses. Washington, D.C., demonstrated the opposite pattern, with high monthly costs but relatively low burden rates due to elevated local incomes.
“While 2023 data reflected mounting burdens, conditions have since stabilized,” Williamson noted. “Price growth has slowed nationally, and prices have even declined in some markets, particularly those with strong construction, helping to ease cost burdens for new buyers and limiting further tax pressure for existing owners.”
The economist predicted a “slow reset” in housing markets, with local dynamics including home prices, property taxes, insurance costs and supply shaping recovery pace across different regions.
How should homeowners navigate affordability challenges? Share your insights in the comments below.
