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5 Most Expensive Cities to Buy Real Estate

five most expensive cities to buy real estate

The American dream consists of owning your own home, but the five most expensive cities to buy real estate put that dream virtually out of reach.

Mortgage rates are low, but the economy teetering on a global recession — or already in one — makes owning real estate a big risk.

There are some areas of the country where the risk is inflated because of the cost of living and cost of homes themselves.

We looked at several data points to determine the five most expensive cities to buy real estate. There’s also the percentage of high-priced homes compared to total housing units available. We also threw in just how far $100 will get you in those areas for good measure.

Here are the five most expensive cities to buy real estate.

5 Most Expensive Cities to Buy Real Estate

1. San Jose, California

Total Number of Housing Units: 369,724

Number of Units Valued Over $1 million: 208,745

% of Units Valued Over $1 million: 56.5

Median Value of Owner-Occupied Units: $1.1 million

$100 = $76.39

The boom of technology companies in Silicon Valley has pushed the price of real estate in San Jose, California, to the highest in the nation.

More than 56% of homes in the San Jose metro area are valued at $1 million or more, meaning you have to have a good chunk of change to buy.

But even if you are looking to rent, being in San Jose is tough. A study by the Bureau of Economic Analysis found rents in the market are 218.4% times the national average.

And considering the value of $100 will actually only get you $76.39 in goods and services in the area, it is incredibly expensive to live in the Bay Area suburb. According to the Massachusetts Institute of Technology, a family with two working adults and two children needs to make $23.62 per hour, per adult to live here.

According to Harvard University’s Joint Center for Housing Studies, the home price-to-income ratio in San Jose is a staggering 10.

High rents and the high cost of homes in the area make San Jose, California, one of the five most expensive cities to buy real estate.

2. San Francisco, California

Total Number of Housing Units: 933,904

Number of Units Valued Over $1 million: 395,858

% of Units Valued Over $1 million: 42.3

Median Value of Owner-Occupied Units: $910,300

$100 = $78.13

Tax incentives make San Francisco an attractive place for start-up companies but if you are looking at real estate, that’s a different story entirely.

Almost 43% of all housing in the San Francisco metropolitan area is valued at $1 million or more and the median value of owner-occupied homes there is $910,300 — slightly less than homes in San Jose.

While it’s expensive to buy, renting isn’t much better. Analysis shows that rents in San Francisco are 195% of the national average. That means buying is tough and if you are looking to rent real estate, high rents make it increasingly difficult.

In the metro area, $100 will actually buy you $78.13 in goods — a 22% downside. Another hit is the home price-to-income ratio, which is near 9 in San Francisco.

A household with two working adults and two children needs to earn $22.77 per hour, per adult in order to live in San Francisco.

That’s what makes San Francisco one of the five most expensive cities to buy real estate.

3. Los Angeles, California

Total Number of Housing Units: 2,098,772

Number of Units Valued Over $1 million: 400,562

% of Units Valued Over $1 million: 19.1

Median Value of Owner-Occupied Units: $650,300

$100 = $85.40

Having a strong manufacturing base with the Port of Los Angeles and a busy start-up sector makes housing in Los Angeles very expensive for those looking to buy real estate.

While the number of homes in Los Angeles valued at $1 million or more is just 19.1% of the total housing market, a lot of that can be attributed to the fact there are more than 2 million homes available in the area.

That said, there are still more than 400,000 houses in Los Angeles valued at more than $1 million.

Rents in Los Angeles compared to the national average also are high. The average rent in the metro area is 166% of the national average. The home price-to-income ratio in Los Angeles is a whopping 9.45.

While $100 goes a little farther in Los Angeles than our previous two cities ($100 buys $85.40 in goods and services), that is still a 14% loss.

In order to live in Los Angeles, a family with two working adults and two children needs to make $20.47 per hour, per adult.

Expensive homes and high rent makes Los Angeles one of the five most expensive cities to buy real estate.

4. New York City

Total Number of Housing Units: 3,769,510

Number of Units Valued Over $1 million: 393,512

% of Units Valued Over $1 million: 10.4

Median Value of Owner-Occupied Units: $457,100

$100 = $81.77

While the West Coast clearly leads the way of expensive property and cost of living, New York City isn’t far behind.

The median cost of homes in any of the five boroughs is more than $457,000 with 10% of all homes in the city valued at $1 million or more.

Rents in the New York-Newark-Jersey City metropolitan area is 153% of the national average. But, while you can make money as a property owner, the high rents you’d have to charge make it hard to find tenants.

And $100 doesn’t go as far in New York as it does in Los Angeles. Statistics show that spending $100 actually buys $81.77 worth of goods and services. Additionally, the home price-to-income ratio in New York City is 5.45.

People living in New York City also have to earn more than those living in Los Angeles. Data indicates a family with two working adults and two children have to earn $22.56 per hour, per adult.

While homes are expensive, hopes of renting your property out for income make New York even harder to invest in real estate.

That’s why New York is one of the five most expensive cities to buy real estate.

5. Miami, Florida

Total Number of Housing Units: 1,283,399

Number of Units Valued Over $1 million: 58,661

% of Units Valued Over $1 million: 4.6

Median Value of Owner-Occupied Units: $298,800

$100 = $92.25

If you are looking to live a jet-setting life on South Beach, it is going to cost you.

The home price-to-income ratio in the Miami metro area (which includes Fort Lauderdale and West Palm Beach) is around 6.3.

While there are fewer homes valued at $1 million or more (4.6%) than in other cities on the list, rents in the Miami area are 130% of the national average.

One bright spot for buying and living in South Florida is the value of $100. Spending that amount will actually get you around $92.25 in goods and services.

Additionally, a family with two working adults and two children only have to earn $17.03 per adult, per hour to live in the region — the lowest of any on our list.

While those are good marks for Miami, the fact remains it is still a relatively expensive place to live.

It’s high home price-to-income ratio makes Miami one of the five most expensive cities to buy real estate.

While California and the West Coast remain the most expensive area to live in the U.S., there are plenty of other areas that make buying real estate a difficult proposition.

Here are some of the other cities that are expensive to buy real estate:

If you are looking to move or invest in real estate, it’s important you know what you are getting into. More specifically, how much is it going to cost to buy and live in a particular area, and it is costly to live in these five most expensive cities to buy real estate.