4 U.S. cities ranked among world's most affordable
Houston, Texas has some of the most affordable housing in the world. According to Bloomberg’s recent Global City Housing Affordability Index, it’s one of just four U.S. cities to make the top 10 list. The index considers average housing cost as a percentage of monthly income.
The world's most affordable housing
Houston came in at No. 2 on Bloomberg’s Affordability Index, just behind Riyadh, Saudi Arabia. In the Lone Star State’s biggest city, residents spend 31.6 percent of their monthly take-home pay on housing.
(Note that when qualifying for a mortgage, lenders look at your before tax or gross income, not your take home pay. Many guidelines suggest that 28 to 32 percent of your gross pay is appropriate for a home loan.)
On average, Houston residents spend $522 on their monthly mortgage payment. Under typical mortgage guidelines, they need just $1,043 in monthly income to cover it. The average monthly rent for Houstonians is $1,978 for a three-bedroom unit.
Other affordable cities
Coming in at No. 3 on the list was Philadelphia, where residents spend 40 percent of their pay on housing. Philly residents need a monthly income of around $1,431 to cover mortgage payments around $716 and rents around $2,172.
“Seven of the top 10 most-affordable cities are in North America: four in the U.S. and three in Canada,” Bloomberg reported. “The least-affordable metro area in the two countries is Vancouver, where an influx of foreign cash has caused a surge in home prices. New York ranked near the middle of the Index.”
Other U.S. cities to make the top 10 list were Chicago and Portland, Oregon. Residents in Chicago spend 45.1 percent of their income on housing, while those in Portland spend 48.2 percent.
Worst places to buy
Thankfully, no U.S. cities made the top 10 list for least affordable cities, according to Bloomberg. In Caracas, Venezuela — the least affordable city in the world — residents pay a whopping 3849.2 percent of their income on housing.
(While no one can sustain a housing payment that’s several times their earnings, these are averages. So in places like Caracas, there are many more people sharing smaller spaces, and many homeless.)
In Caracas, residents need a minimum monthly paycheck of just under $4,000 to buy a home, though the average resident takes home just $31 per month.
At No. 2 on the list was Kiev, Ukraine. Kiev residents face monthly mortgage payments of $1,521 but take home only about $286 a month.
“Emerging economies currently have the least-affordable housing, led by Caracas and Kiev in Ukraine,” Bloomberg reported. “The remaining cities in the bottom 20 include seven in Asia and six in Latin America. London is the least-affordable major city in Western Europe, with average monthly rent and mortgage payments equaling 135 percent of monthly net income.”
Get today's mortgage rates
It seems many U.S. markets are among the world’s most affordable. And with mortgage rates on the decline, now just may be the perfect time to buy. Want to take advantage? Check your rates with multiple lenders today to get the best deal.