Affordable homes are getting harder to find

While homeownership has always been part of the American dream, it may be moving out of reach for many.

Residential real estate in many of the country's biggest cities has been on an upward climb, becoming increasingly expensive. At the same time, median wages for American workers have barely budged since the recession ended in 2009.

That means a median-income household can now afford a median-priced home in only 10 out of the country's 25 largest metropolitan areas, according to a new report from Interest.com. While record low mortgage rates have helped affordability across the board, that hasn't benefited many would-be buyers in ultra-expensive markets such as San Francisco.

"The long-term bigger problem is that median incomes are still not keeping up with home prices, even in years with more modest increases," said Interest.com managing editor Mike Sante.

Median incomes have increased 2 percent this year in the country's biggest cities, while real estate prices have jumped 6 percent, he said. While that's more moderate than 2013's 16 percent boost in real estate prices in the biggest cities, it still "means homes will continue to become less affordable," Sante added.

San Francisco far and away ranked as the country's least affordable metropolitan area, the study found. Households making the city's median income of roughly $79,600 would fall 46 percent short of the income required to buy a median-priced home. It's important to note that San Francisco's median income is 53 percent higher than the nationwide median of about $51,900.

San Diego was the second least affordable city, with a shortfall of 38 percent. New York and Los Angeles both had a 32 percent shortfall, followed by Miami's 26 percent.

The danger for residents of those cities is spending too much on a home, and becoming "house poor."

"When homes become less affordable, they feel they have to devote a larger percentage of income to housing costs," Sante notes. "In New York City, it's not uncommon to find people spending half of their gross income on housing."

The rule of thumb is to keep housing costs -- including mortgage, insurance and taxes -- to one-third of gross income. Once home buyers go above that, they may find it more difficult to put away money for retirement or their children's college funds, he added.

So, what are the most affordable big cities? Minneapolis scored highest on Interest.com's ranking, with the median household income 23 percent higher than what would be needed to buy the median-priced home. Atlanta was second (22 percent), while St. Louis was third (20 percent). Detroit was the fourth most affordable (14 percent), while Pittsburgh was fifth (13 percent).