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Homeownership may be the American Dream, but a new study by MagnifyMoney suggests that some people may need to dream about something else.
According to its 2016 Housing Affordability Study, MagnifyMoney concluded that 20 percent of Americans living in 70 of the 380 metro areas analyzed for this report will not be able to qualify for a mortgage that could cover the cost of a median-priced home. This is especially dire in California, where nine of the 10 most expensive metro areas for 25- to 44 year-old homebuyers are located. The San Luis Obispo-Paso Robles-Arroyo Grande market and the Los Angeles-Long Beach-Anaheim corridor were identified as the two most expensive housing markets in the nation.
As for affordability, Johnstown, Pa., was named the easiest place for 25- to 44-year-olds to save for a home.
“Affordable housing is in abundance,” said Mandi Woodruff, executive editor at MagnifyMoney. “A median-priced home in Johnstown is $74,900. With a goal of saving enough to cover a 20 percent down payment, closing costs, and a one-month mortgage payment reserve, the total amount workers would need to save is $19,720. Earning the median annual income for that area of $53,164, they would need just 1.85 years to save.”
Woodruff added that Midwest markets—albeit smaller ones like Danville, Ill., Bay City, Mich., and Racine, Wis.—are among the most affordable in the nation. “Nine out of the 10 most affordable metro areas are located in the Midwest, where housing prices are significantly lower compared to other regions,” she said. “On average, it would take just 2.28 years for a 25- to 44-year-old to save for a home in the 10 most affordable metros.”