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10 Least Affordable U.S. Housing Markets

Americans on average spend right around 30% of their income on their housing -- so naturally they want to find the best deal out there. However, there are 10 areas in the U.S. where those deals are the hardest to find, and they make up the least affordable housing markets in the country.

Every quarter, the National Association of Home Builders and Wells Fargo release the Housing Opportunity Index, or HOI, which measures what percentage of homes sold in a given area are considered affordable.

According to Rose Quint, assistant vice president of survey research at the NAHB, the index is a "function of a number of factors and how they all come together," and isn't simply a measure of price relative to income but also considers insurance, taxes, and a number of other factors.

In the second quarter of this year, the HOI stood at 69.3%, meaning that more than two-thirds of homes sold in America would be considered affordable. That's a decrease from the 73.7% in the first quarter -- but still well above both the historical average and the unaffordability that marked the period during the housing boom, when less than 45% of homes sold were considered affordable for nine straight quarters.

Yet there are a number of major U.S. markets where a 45% affordability reading would being a tremendous thing -- and in fact, there are five markets in California alone that have an HOI below 45% as of the most recent quarter. This article has more on the reason one of those markets is so expensive.

I spoke recently with Robert Denk, assistant vice president for forecasting and analysis at the NAHB, who noted that a lot of these markets have low levels of affordability because of space constraints. "In areas like Kansas and Texas you can expand as far as the eye can see," he said, "but in areas like Florida and California and a lot of areas along the east and west coasts, that's just not true."

He also said the age of the cities makes a difference, especially in older cities that didn't see quite the same boom during the housing bubble but still remain unaffordable.

However, specifically along the California coast, Denk added, "those are places that start out pretty expensive, and there was not a whole lot of building there." As a result, prices in certain areas shot up during the housing boom and have largely retained their values after the bubble burst, because they "didn't have all the excess supply," leading to higher levels of unaffordability.

But there are 10 markets where unaffordability reigns -- and just how unaffordable and expensive they are may surprise you.

Beyond housing
While knowing whether or not you live in affordable area is important, it's equally important to know what to do with your savings. Yet millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. However, those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

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