Many people dream of taking a step on to the property ladder, but in certain cities it quickly becomes clear the step is rather more of a leap. In order to assess which cities are the most expensive for their residents to purchase a home in, it is necessary to measure not only metropolitan housing prices, but also the typical income of each household and the ACCRA cost of living index.

TUTORIAL: Exploring Real Estate Investments

Taking information from Kiplinger's annual rankings and metropolitan city data from the Census Bureau, homes in these five cities are least affordable when compared to local salaries.

New York, NY
For anyone who has ever looked at the real estate market in New York, it quickly becomes clear that the city's high wages don't stretch too far.

With a median household income of $63,553 and an average home price of $1.14 million, the typical home in New York is approximately 18 times greater than the household median income. According to Trulia's Rent versus Buy index, it is far more affordable to rent than buy in the Big Apple. With a population of approximately 8.2 million according to the most recent U.S. census report, New York's resilient housing market is due to the combination of a shortage of land to build upon and the city's attraction to young people from across the country.

Despite the high cost of living, the city continues to draw talented graduates in the arts and sciences, leading financial institutions and a strong start-up scene. The combination of these provides the economic force behind both higher incomes and higher housing prices. (For related reading, see Mortgages: How Much Can You Afford?)

San Francisco, CA
With a median household income of $74,876 and an average home price of $808,481, San Francisco looks more appealing for home buying than its East Coast rival. However, the City by the Bay is still far from a real estate bargain as the average home is approximately 11 times greater than the median household income there.

Much like New York, the city boasts a density of population combined with little space to fight over. Increasing the supply of housing in the dense metro area of San Francisco is difficult, and much like New York, the land comes at a greater premium. The city remains a quality of life destination and its strong economy is due to a mixture of finance, trade and tourism, as well as the influx of new media and software companies. (For related reading, see To Rent Or Buy? The Financial Issues- Part 1.)

Honolulu, HI
Economic reasons are not the only factors in high cost of living. In much the same way as many people are willing to pay more to be part of the excitement of life in New York city, residents of Honolulu are willing to foot the expense of white sand beaches, stunning views and island culture. With a median household income of $67,066 and an average home price of $689,781, the typical home is approximately 10 times greater than the median household income there.

Well-heeled foreign buyers keep prices high and the remoteness of the island means that many building materials have to be shipped long distances. Sandwiched between ocean and mountains, the picturesque nature of the island also inflates property values and increases construction costs. The terrain is difficult to build upon and useable land is limited as much of the island has been set aside for preservation, military or agricultural usage.

Los Angeles, CA
With a median household income of $58,987 and an average home price of $576,173, the typical home in Los Angeles is just under 10 times greater than the median household income there. According to analysis commissioned by US News and World Report, the median income translates to a real income of just $41,331 when cost of living is taken into account. Compared to the calculated real income of $35,370 in New York and $40,736 in Honolulu, Los Angeles is marginally more affordable.

Home prices have fallen after the recent housing boom and unemployment has increased. Yet the city remains the bastion of the entertainment industry, home of many of the country's wealthiest celebrities and continues to attract dream-seekers, as well as those looking to live in the city's warm climate.

San Jose, CA
Silicon Valley's home prices may have fallen from their peak, but the San Jose metro area remains expensive for those looking to buy. With a median household income of $85,020 and an average home price of $761,867, the typical income may be the highest of our list but the residents need those paychecks in order to afford the area's housing prices. Home prices are about nine times greater than the median household income.

The concentration of the technology industry in the San Jose area and the historical World War II population boom of talented engineers and scientists resulted in an influx of talent flocking to the valley. Combined with the impact of the tech millionaire's mansions, housing prices have remained high due to tight regulations, building codes and challenging terrain for construction. (For related reading, see To Rent Or Buy? There's More To It Than Money.)

TUTORIAL: Buying And Owning Real Estate

The Bottom Line
Surprisingly this top five list only boasts one east coast representative and three of the most expensive cities for property ownership are huddled together in coastal California. The remoteness and picturesque nature of Honolulu cements its place in the top five. The other four cities all hold a certain allure to young people, they are centers of economic power where a clustering of talented workers drive both wages and house prices higher. Land shortage or difficulty of terrain for construction comes into play as well as the influence of the super elite and wealthy foreign investors.

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