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56 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t ANALYTICS the latest low Housing supply impacts Housing affordability in Major cities Cities with high population growth are the least affordable. l ow housing supply is causing affordability to decrease in U.S. cities, according Zillow's February Real Estate Market Reports. Affordability is worst in fast-growing cities that have fallen behind in building homes to keep up with population growth. Currently the average U.S. homebuyer can expect to spend 15.3 percent of his or her monthly income on a mortgage payment. Affordability is best in places with slow population growth, like Detroit, or places that have met new growth by building new housing units. Chicago per- mitted 906 new housing units in 2012 and 2013 for every 1,000 new residents between 2013 and 2014. This made the city more afford- able, with homebuyers paying a slightly lower percentage on their mortgage than the national aver- age. Chicago residents can expect to pay about 13.9 percent of their income on a mortgage. "As the economy continues to improve, more Americans are slowly moving off of their buddies' couches and out of their parents' basements into homes of their own, first likely as renters and then eventually as homebuyers," said Zillow Chief Economist Dr. Stan Humphries. "Unfortunately, the supply of affordable homes, especially af- fordable rentals, is insufficient in many areas to meet this grow- ing demand. As a result, the competition for those homes that are available can often be fierce, driving up prices and contribut- ing to worsening affordability. More construction will help ease the crunch, and getting a mortgage is also getting easier, which will help more current renters transition to homeown- ership and further ease rental inventory shortages. But these fixes won't happen overnight." Detroit had the most afford- able housing in Zillow's report. Homebuyers living in this city will pay about 10 percent of their income on a mortgage. St. Louis and Pittsburg tied for a close second. Homebuyers in either of those cities will pay about 10.8 percent of their incomes on a mortgage. Houston, Virginia Beach, and Tampa were all more affordable markets, while San Diego, San Jose, and Sacramento were less affordable. San Francisco is one of the country's least affordable housing markets. For every 1,000 new residents, there were just 193 new housing units permitted. Residents of San Francisco pay 39.2 percent of their income on monthly mortgage payments, more than double the national average. Los Angeles has the highest rate, with a mortgage in that city costing a homebuyer 40 percent of their income. Policymakers have been try- ing to combat the short supply. The mayor of San Francisco has pledged to add 30,000 housing units by 2020, and a Boston city report made a similar recom- mendation to meet demand with 53,000 new housing units by 2030. Since 2000, rents have grown at roughly twice the pace of incomes. Partially as a result, the percent- age of Americans citing "cheaper housing" as a reason they moved to a different home has shot up since then, from 5.6 percent to 9.6 percent currently, according to the U.S. Census Bureau. Over the past several years, rent- ing—historically a budget-minded choice—has become increas- ingly less affordable. Meanwhile, recovering home prices, along with historically low mortgage rates, have made buying more afford- able than it was historically, on a monthly basis. Zillow's February Real Estate Market Reports showed home values up 4.9 percent year- over-year to $178,700. U.S. rents rose 3.4 percent to $1,355.