How Affordable Is That Home, Really?

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For years, housing affordability has been measured by a simple rule of thumb: Households should spend no more than 30% of their income on housing. But today, rising home prices, higher interest rates and surging property taxes and homeowners’ insurance premiums are pushing the cost of owning and renting much higher. Many buyers experience payment shock after moving into their home.

By examining the full scope of homeownership costs, buyers may steer clear of being “cost-burdened”—the label applied by financial experts when too large a share of income goes toward housing.

Nadia Evangelou, principal economist and director of real estate research at the National Association of REALTORS®, notes that the 30% benchmark still works as a useful measure of financial strain.

“It gives us a consistent way to say when housing starts putting pressure on a household budget,” she says. However, the impact varies: “If you earn $250,000 a year and spend 32% on housing, you still likely have flexibility. But if you earn $60,000, spending 32% can mean very real trade-offs.”

Christopher Wands, real estate pro and founder of The Wands Team at Douglas Elliman in Miami, encourages his clients to plan for the unexpected. “Even high-income buyers can underestimate cumulative ownership costs,” including landscape, maintenance and emergency repairs—which sometimes can add 10% to 20% beyond what they initially expect. “All of a sudden you’re paying another quarter of a mortgage payment,” he says.

The 30% Threshold: Measuring Housing Affordability

Financial experts say households that consistently spend more than 30% of income on housing are more likely to cut back on essentials, struggle to save for the future, or face stress when unexpected costs arise—like tax reassessments, insurance spikes or major repairs. The financial setback could even delay life goals, such as retirement.

The 30% measure can reveal regional differences in affordability that reflect nuances within the area’s housing market. In some markets, high home prices are the main driver eating away at affordability; in others, rising property taxes or insurance premiums are pushing housing costs higher, even when home values or rents are more moderate. Maps tracking households exceeding the 30% threshold highlight where affordability pressures may be most acute.

Evangelou notes that local averages provide useful context: “If most people in your metro are spending 34% of their income on housing, that tells you affordability is tight. But affordability can be personal. It depends on your job stability, savings, debt and possibly whether you have children or are supporting a family.”

View in your metro area how many homeowners and renters are spending more than 30% of their income on housing costs.

View the median amount a household spends on housing costs in your metro area.

Most and Least Cost-Burdened Metros

The areas with the highest share of homeowners spending more than 30% of their income toward housing, according to NAR’s Market Statistics Dashboard, are:

1. Miami-Fort Lauderdale-West Palm Beach, Fla.: 36.5%; $2,647 (median monthly mortgage cost)
2. Napa, Calif.: 36.1%; $3,447
3. Yuba City, Calif.: 34.7%; $2,453
4. Atlantic City-Hammonton, N.J. metro area: 34.6%; $2,194
5. Los Angeles-Long Beach-Anaheim, Calif.: 34.1%; $3,277
6. Merced, Calif.: 33.7%; $1,878
7. Redding, Calif.: 33.6%; $2,217
8. Riverside-San Bernardino-Ontario, Calif.: 33.6%; $2,566
9. Bozeman, Mont.: 33.4%; $2,806
10. Stockton-Lodi, Calif.: 33.2%; $2,658

The following are the metros with the lowest share of homeowners spending more than 30% of their income on housing:

1. Kokomo, Ind.: 12.5%; $1,194 (median monthly mortgage cost)
2. Mansfield, Ohio: 12.8%; $1,263
3. Dubuque, Iowa: 13.8%; $1,596
4. Lafayette-West Lafayette, Ind.: 13.8%; $1,541
5. Green Bay, Wis.: 13.9%; $1,656
6. Muncie, Ind.: 14.2%; $1,241
7. Florence-Muscle Shoals, Ala.: 14.8%; $1,284
8. Morgantown, W. Va.: 14.8%; $1,430
9. Bay City, Mich.: 14.9%; $1,394
10. Midland, Mich.: 14.9%; $1,394

Evangelou explains some of these differences: “In California metros, high home prices mean even households earning higher incomes often need to devote a larger share to housing. In contrast, Midwestern metros like Kokomo and Lafayette have home prices more aligned with local incomes, so the share of income allocated to housing is lower.”

Planning for the Full Costs of Homeownership

Many buyers may focus only on qualifying for a mortgage, but they risk underestimating what it takes to maintain a home comfortably once insurance, escrow, taxes and upkeep costs are included, real estate agents say.  

Ryann Brier, a real estate pro with City Lights Home Buyers in Grand Rapids, Mich., says too many buyers are stretching their budgets. “They’re not considering everything that falls into what needs to be in their budget, like taxes, insurance and the regular costs to run a home, like utilities and trash,” she says. These added expenses, however, could add an extra $1,000 or more per month to costs, she says.

For homeowners in states like Michigan, property taxes can spike after a sale, sometimes even doubling in the second year. Nationally, between 2012 and 2023, property taxes rose by an average of 12%, with the average annual tax bill at $4,380, although varying dramatically by region, according to the Census Bureau’s American Community Survey. Escrow often accounts for about 20% of the total monthly housing cost, Evangelou notes.

Shawn Yerkes, group president of financial services at Genstone Financial, recommends saving at least 10% of the home’s value beyond the down payment for closing costs, escrow and reserves to cover unexpected expenses.

And don’t dismiss insurance as part of the equation—a costly mistake too many buyers are making lately, says Julia Taliesin, an economic analyst and data journalist with Insurify. Forty-five percent of buyers say they didn’t consider insurance costs in their home purchase. Yet, more than half—57%—found they had to make financial sacrifices because of rising premiums, such as taking on more debt or delaying home repairs.

Nationally, the average annual home insurance cost has jumped to $3,000, Insurify’s research shows. Between 2019 to 2024, home insurance premiums jumped 57%, with the highest increases in areas that have faced the greatest climate-related disasters, according to Freddie Mac data. For example, in Florida, premiums can exceed $8,500 annually, consuming over 11% of median household income. Taliesin urges more buyers to check online insurance tools for price estimates or to call providers—even before they buy a home—to gauge estimated costs.

REALTORS®, members of the National Association of REALTORS®, also are turning to tools like the Market Statistics Dashboard and the REALTORS® Property Resource. These resources can provide metro-level insights to share with their clients, such as housing affordability, property details, mortgage and tax data, and even regional estimates for repair and renovation costs.

First-time buyers often are the most at risk from some of these growing affordability pressures, Evangelou says. “They enter at higher prices and rates, and often don’t have built-up equity or large savings,” she says. “Long-term homeowners are somewhat protected on the mortgage side, though rising insurance and tax costs still affect them.”

Regardless, buyers need to realize that housing affordability isn’t just about the mortgage, Evangelou notes. “Buyers need to consider all costs—taxes, insurance, utilities, maintenance and unexpected repairs,” she says. “Planning for the full picture helps households avoid financial stress and make homeownership sustainable.”

Worksheet: Estimating Monthly Housing Costs

Source: Census Bureau’s American Housing Survey (2023 data) and Harvard University’s Joint Center for Housing Studies’ State of Nation’s Housing 2025

Rising Number of Homeowners, Renters ‘Cost Burdened’

*Record high

Source: Harvard University’s Joint Center for Housing Studies’ State of Nation’s Housing 2025