(MoneyWatch) We keep hearing that home prices are more affordable than ever, but many Main Street Americans are having trouble finding deals that they can afford -- or that banks think they can afford. Loans are hard to come by, down payment requirements are high and many consumers' incomes have fallen.
A recent report by Interest.com, a Bankrate company, shows that median-income households can afford median-priced homes in only 14 of the 25 largest metropolitan areas in the U.S. Detroit, Atlanta and Minneapolis are the most affordable areas while San Diego, New York and San Francisco remain the least affordable.
"Despite all the talk about how homes are more affordable than they have been in decades, buying a home is still a big challenge for many American households," Mike Sante, managing editor of Interest.com, said in a press release. "Dealing with rising expenses and stagnant wages is a struggle." Years of declining home prices and record-low mortgage rates have done little to increase home affordability in nearly half of the metro areas surveyed.
The study looked at city-specific data on median home prices and incomes; average property taxes and homeowners insurance premiums; and consumer debt and mortgage rates. Affordable cities received a grade of "C," indicating that someone making the median income can afford a median-priced home.
According to the results, the top five most affordable metro areas in the U.S. are Detroit, Mich.; Atlanta, Ga.; Minneapolis, Minn.; Phoenix, Ariz. and St. Louis, Mo.
But there's more to the story than meets the eye. In Atlanta, the median sales price for a home is $103,200 -- well below the average of $229,516 for the 25 largest cities covered in the survey. The metropolitan area also benefits from lower than average property taxes, insurance costs and labor rates, along with a higher-than-average median income. According to Interest.com, Atlanta's median income exceeds the income needed to buy a median priced home by 40 percent.
Unlike Atlanta, which is affordable due to higher-than-average incomes, Detroit is affordable because it's broke. The average home price is only $60,200 -- far less than the average for the largest 25 metros -- due in large part to the nearly 90,000 homes that sit abandoned. Detroit also has one of the lowest median incomes in the country at only $48,968. And, despite it's "affordability," a higher than average unemployment rate means it's a place many Americans wouldn't choose to live right now, so low home prices don't translate into sales.
The other end of the spectrum -- those metros that are least affordable -- reveals another issue with today's real estate market: Outside investment. Because of the expenses associated with living in cities like San Francisco and New York, many Americans can't afford to buy homes there. But the weakness of our dollar is great for wealthy investors from other countries looking for a pied-a-terre in the states.
"We're seeing lots of cash deals -- 27 percent of all multiple listing service deals in our recent figures," Donna Sanfilippo, president of the San Diego Association of Realtors, told Interest.com. "Investors are coming back into the market. We're seeing foreign investment. Right now, we have the lowest amount of inventory on the market we've seen since 2009."
Those large purchases by investors keep home prices up for existing homeowners, but the high home values are also pricing many would-be buyers out of their local markets. San Francisco has a median income of $71,975, but many residents would still have trouble affording a median-priced home; the median price for a home in San Francisco is $552,600.
The other least affordable metros in the U.S. include Los Angeles, Calif.; Miami, Fla.; San Diego, Calif. and New York, N.Y.