Housing has become so unaffordable that even dual-income households in America are being priced out of a large share of neighborhoods in their own cities.

A new report by Creditnews Research ranked the top 50 most populous cities by the percentage of neighborhoods that the typical married-couple household could afford to buy a house in.

A neighborhood was deemed affordable if the monthly mortgage payment on an average home was below 25% of the average married-couple household’s income, assuming a 20% down payment and a 30-year fixed-rate mortgage of 7%.

The study reaffirmed that the most unaffordable cities tend to be located in some of the country’s most expensive housing markets. But it also exposed much more.

The study found that 12 cities have an unaffordability percentage of at least 50%—meaning that married-couple households couldn't afford a home in at least half of the neighborhoods in their city.

Four cities—Los Angeles, St. Louis, Boston, and San Jose—had an unaffordability percentage of 100%. That means married-couple households couldn’t afford an average home in any of their respective city’s neighborhoods.

Boston, New York City, Miami, Nashville, Richmond, and three other California cities were also ranked among the ten most unaffordable cities.

“The affordability gap has widened significantly since Covid,” the report said, adding that “no major city has reported an improvement in affordability post-pandemic.”

Among the ten cities with the biggest increase in unaffordable neighborhoods since Covid, five were located in California.

The report wasn’t all bad news. In 23 cities, the average married-couple household could afford to buy a home in 80% of neighborhoods. These include major hubs like Chicago, Dallas-Fort Worth, Las Vegas, and Atlanta.

By far, the most affordable cities were Cleveland, Memphis, and Hartford—each with an unaffordability score of 0%.

Despite Americans facing the toughest housing market in decades, experts advise against delaying purchases in hopes of better bargains, especially with lower rates.

Falling mortgage rates aren’t what they seem

Many aspiring homeowners are sitting on the sidelines, hoping that mortgage rates will drop and make their next purchase less expensive. Unfortunately, that's not a lock-in.

If history is any indication, home prices are more likely rise during periods of falling mortgage rates.

Creditnews Research crunched the numbers and determined that, between 1987 and 2023, home values increased 80% of the time when mortgage rates fell.

In fact, home prices and mortgage rates only fell together in any meaningful way during major recessions or financial crises, such as the Great Recession and Covid lockdown.

“With chronically low housing inventory, any increase in demand caused by lower mortgage rates will likely drive up prices in the limited pool of available houses, potentially offsetting any savings from lower mortgage rates,” wrote Creditnews analyst Dwight Cass.

“Simply because home mortgage rates are higher and have, in fact, wiped out some of the purchasing power for homebuyers, [is] not in itself a reason to not buy,” said Selma Hepp, chief economist for CoreLogic.

And while many pundits think they know where mortgage rates are headed, nobody has a crystal ball. In fact, rates have increased in recent weeks, briefly approaching 7% in late February.

Mortgage rates could remain elevated

If expert forecasts are anything to go by, mortgage rates probably won’t drop very much from current levels. That means aspiring buyers will likely face a double-whammy of still-elevated rates and even higher home prices later this year.

“Experts predict that rates should be in the mid-sixes by the fourth quarter of 2024 according to recent indicators,” according to Jeff Ocasio, a loan officer with Fairway Independent Mortgage Corp.

“Markets, values and rates are always changing, so it's crucial to make the most of the present. If you’re renting and can qualify, now is the best time to take the leap,” he explained.

Even during 2023, which was a slow year for real estate by historical standards, home prices increased for nine consecutive months, according to CoreLogic’s Case-Shiller home price index of 20 major markets.

Prices have since decelerated, but only slightly.

“Looking back at the year, 2023 appears to have exceeded average annual home price gains over the past 35 years,” said Brian D. Luke, head of commodities at S&P DJI.

Analysts at Wells Fargo expect home prices to rise by 2.5% this year before accelerating by another 4.5% in 2025.