- In many markets, taxes, insurance, and PMI now make up over 40% of the total monthly housing obligation.
- A buyer in Anaheim, CA, requires nearly 10 times the income ($319,000) of a buyer in Johnstown, PA ($32,000) to enter the market.
- Rising property taxes and insurance premiums are now variables that act as a hidden tax, eroding buyer power.
The current affordability crisis is no longer defined solely by the push-pull of mortgage rates and home prices.
The Cotality Housing Affordability Index (CHAI) reveals that rising insurance premiums and escalating property tax burdens have become the critical variables eroding buyer power.
While housing affordability has long been a localized struggle in coastal hubs like California, New York, and Boston, the post-pandemic era has expanded this challenge into a systemic national issue. Today, the map of American homeownership is being fundamentally redrawn, not just by interest rates, but by a "secondary squeeze" of rising ownership costs distributed across the country’s Core-Based Statistical Areas (CBSAs).
In many markets, the "escrow burden"—the combined weight of taxes, insurance, and PMI.1 —now exceeds 40% of the total monthly obligation, according to Cotality experts. While this trend is most visible in the Midwest and Northeast, Texas provides the archetypal example: low home prices are often offset by high escrow costs.
Although many Texas markets appear accessible based on sale prices alone, these elevated escrow costs act as a ‘hidden tax’, altering the total cost of ownership more than the mortgage itself.
2025 escrow share by CBSAs
Data source: Cotality, 2025
A divided map of opportunity
This "escrow squeeze" has led to a stark contraction in the national housing market. Cotality data reveals two troubling trends over the last decade:
- A national decline: The number of affordable markets has plummeted by 40% over the last decade, dropping from 354 in 2014 to just 212 in 2025.
- The vanishing middle: “High affordability” regions (indexing at 200+) have nearly vanished, shrinking from 41 markets in 2014 to only four today.
Number of affordable CBSAs by year
Data source: Cotality, 2025
The "affordability desert" has fully engulfed the West Coast and major Eastern hubs like New York City and Miami, leaving the Midwest and segments of the South as the final anchors of median-income accessibility.
2025 affordability index for CBSAs
Data source: Cotality, 2025
Note: Above 100 on the CHAI is affordable
The disparity between these extremes has reached a historic ceiling. In Anaheim, CA, a homebuyer requires an annual income of roughly $319,000 to afford the $7,974 monthly housing expense. Conversely, in Johnstown, PA, ownership remains accessible to those earning $32,000 or less. The contrast is staggering: a buyer in Anaheim requires nearly ten times the income of a buyer in Johnstown to enter the market.
Least affordable CBSAs in 2025
Most affordable CBSAs in 2025
Data source: Cotality, 2025
Resident vs. non-resident perspectives
It is important to note that affordability is a relative metric. While a market may be statistically "unaffordable" for a local resident, it often presents a significant arbitrage opportunity for out-of-state buyers.
Cotality experts continue to see migration patterns driven by this disparity; a Californian—armed with coastal equity—can easily outcompete locals in Arizona or Nevada, further tightening those markets and exporting affordability challenges across state lines.
Methodology
Escrow cost is derived from Cotality Loan level Market Analytics (LLMA) data. Escrow costs are calculated using data obtained from Cotality Loan Level Market Analytics (LLMA). The primary elements included in the escrow amount are property taxes and insurance premiums. For loans that also require private mortgage insurance (PMI), the cost of PMI is incorporated into the overall escrow amount.
Cotality Housing Affordability Index (CHAI) measures an average family’s ability to purchase a median priced house in a particular time and area. The formula is based on the National Association of Realtors (NAR) affordability index measures. However, our assumptions are slightly different than NARs and are based on the Cotality analysis. In addition, we also include escrow amount (insurance and tax) in the monthly payment while measuring the affordability index.
The indices are expressed as ratio of median family income to qualifying income, times 100. Thus, an index of 100 indicates that an average family with a median-income has just enough income to afford a median-priced house. An index above 100 means that more families can afford to buy a house while an index below 100 means that more families cannot afford to buy a house.
Data and assumptions: Median home price to derive down payment comes from Cotality property record data, where down payment is assumed equal to 15% of the home sale price. Interest rate is derived from Freddie Mac average Mac 30-years.
Minimum Qualifying Income is derived from the FFIEC Median Family Income (MFI) Report. We assume the monthly housing expenses (principal, interest, taxes, and insurance (PITI)) should not exceed 30% of the household income.
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