Detroit Among 6 Toughest Cities To Save Money: Report

DETROIT, MI — How hard is it to save? That depends on many things and where you live is one of them. According to a new study that analyzed 50 large cities around the United States, Detroit is one of only six where homeowners cannot afford to save.

PropertyShark teamed up with RENTCafé for a joint study, looking at the top 50 largest cities (but note that Manhattan, Brooklyn and Queens have been considered individually) where homeowners and renters can save the most money after paying their living expenses.

It turns out that U.S. homeowners in 44 out of the 50 cities we analyzed can put some money aside at the end of the month. Detroit is not among the 44 cities where homeowners can save money at the end of the month though. After covering housing and living costs each month, homeowners in Detroit are left with a $905 hole in their pockets, the study found.

Here are some of the key takeaways:

• Only homeowners in Miami have a more difficult time saving money than those in Detroit since at the end of the month they might be left with $1,219 in debt, if they don’t cut down on expenses
• Renters in Detroit fare worse than homeowners – after rent payment and covering living costs they’re left with $1,321 in debt
• You can save more than 4.5k/month in Manhattan, $3.5k in San Jose and $2.6k in San Francisco if you’re a homeowner.
• Renters in Virginia Beach can save the most money ($883), while renters in Brooklyn and Boston have the hardest time out of the batch, with a $2k+ debt/month.

Homeownership and saving

In Miami, Detroit, Cleveland, and Philly, homeowners struggle to save. Memphis and New Orleans also fall in this category, although spending below the median costs helps you achieve a sustainable living, the study said.

Miami sits at the bottom of the list, with very low median household income ($4,241) compared to similar cities and living costs exceeding $4,274. Adding housing costs to the mix ($1,186), monthly expenditures leave the average Miami homeowner with a debt of $1,219 each month. With living costs already higher than the median income, you’d have to drastically cut your expenses to afford living in the city.

The situation in Detroit isn’t bright either, they said, where the median household income of $3,204 isn’t enough for paying monthly essentials and housing costs, let alone saving, leaving the owner with a hole of $905 each month.

In Cleveland and Philadelphia, homeowners struggle as well. The median household income in Cleveland is $3,536, just about the equivalent to the monthly living costs, which equates to $3,647, leaving the average resident in a $842 debt if they don’t cut on expenses. In Philadelphia, the average owner accrues $719 more in debt each month.

At the top of the list was Manhattan. If you jumped through hoops and finally managed to save on a down payment in Manhattan, the hard part is over, the study found. The NYC borough ranks as #1 when it comes to saving money as an owner and boasts the largest median household income out of the 50 cities: $11,837 per month.

What about renting?

Renters have it far worse, the study found.

Out of the 50 cities, there are only four where a renter earning the median income can actually save a decent amount of money after covering rent and living, and not because of high income but as a result of a healthy balance between the median income, rent and living costs.

As opposed to homeowners, a large median income doesn’t always guarantee an easier life for renters, due to extremely high costs, the study said. In Detroit, that equates to a more than $1,300 debt each month.

The most affordable cities to rent in and save are Virginia Beach, Austin and Raleigh, according to the study.

The analysts behind the study determined the discretionary income by subtracting living and housing costs from the median household income. The median household income was extracted from Census, separately for homeowners and renters. Living costs were calculated by multiplying the monthly national living costs—which are calculated by the U.S. Department of Labor—with the NUMBEO Cost of Living Index.

Check out the complete study here.

Image via Shutterstock; graphics via PropertyShark

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