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Santa Monica Third Least Affordable City in U.S. for Homebuyers, New Study Finds
By Jorge Casuso
June 15, 2021 -- Santa Monica -- which is known for its picture postcard views and soaring real estate prices -- is the third least affordable city in the nation to buy a home, according to a study released Tuesday.
The popular beach destination had a "weighted home price" of $1,427,568, which takes into account household size, and a median household income of $92,490, according to the study by AdvisorSmith.
Only Palo Alto, which topped the list with a weighted price of $2,672,011 and a median household income of $160,360, and Newport Beach, with $2,094,913 and $128,294 respectively, were less affordable.
The four most expensive cities -- Santa Barbara ranked fourth after Santa Monica -- were small, having a population of less than 100,000.
The least affordable large city -- with a population of more than 350,000 -- was Los Angeles, which ranked 11th, with a weighted home price of $759,627 and a median household income of $67,418.
The "price-to-income ratio" for Santa Monica -- arrived at by dividing the home price by the the household income -- was 15.4, more than three times the average ratio of 5.0 nationwide.
According to the National Association of Realtors, the median price of a single-family home in the U.S. has been rising at a record pace during the first quarter of this year.
Last month, the Wall Street Journal reported that "America’s home-buying frenzy" was "cooling off for the first time since it heated up last year," with existing home sales falling 2.7 percent between March to April.
The drop was due to "limited inventory and record high prices (that) are excluding potential buyers," the Journal reported.
But the home-buying market is expected to remain hot as "the forces driving home sales haven’t gone away.
"Low mortgage rates and the rise of remote work, which sent buyers scrambling to find larger living spaces, are still spurring demand," the Journal wrote.
Of the 50 least affordable cities in the country, 41 are in California, according to the AdvisorSmith study. The least affordable city outside the state was Miami Beach.
New York City; Honolulu, Hawaii, and Boulder Colorado were the only other non-California cities in the top 30.
The most affordable cities were in the Midwest. Flint, Michigan topped the list with a weighted home price of $37,145 and a median household income of $32,236. That gave it a price-to-income ratio of 1.2.
The runner-up for most affordable city was Gary, Indiana, followed by Decatur and Peoria, both in central Illinois.
"The most affordable homes were mainly found in small and midsize midwestern cities, with a sprinkling of southern cities as well," the study found.
AdvisorSmith's study looked at housing price data from Zillow’s Home Value Index for late April, according to the site.
It also looked at household income, household composition and population data from the U.S. Census Bureau’s American Community Survey last conducted in 2018.
For the full report click here
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