Home prices: These US cities are now so expensive they’re considered ‘unaffordable’

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The skyline of downtown Los Angeles, California as seen on January 22, 2024



CNN

Anyone who has monitored the housing market over the past two decades knows that in many countries, especially the United States, buying a home has become more difficult.

But a new report sums up how many potential homebuyers feel by creating a category that classifies some major cities as “unaffordable.”

The report compared average income with average home prices. It found that pandemic-driven demand for homes with outdoor space, land use policies aimed at reducing urban sprawl, and investors piling into markets led to higher prices.

US cities on the West Coast and Hawaii ranked five of the 10 most unaffordable places, according to the annual Demographics International Housing Affordability Report, which tracks home prices for 20 years.

Perhaps not surprisingly, the most expensive US cities to buy a home are in California, with San Jose, Los Angeles, San Francisco and San Diego rounding out the top 10.

Hawaii’s capital Honolulu also received a sixth-place mention out of 94 major markets surveyed in eight countries.

Australia is the only other country besides the United States to dominate the list of “unaffordable areas”, led by Sydney and the southern cities of Melbourne in Victoria and Adelaide in South Australia.

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Rowers make their way along the Maribyrnong River outside Melbourne, Australia on April 18, 2023.

But topping the global leaderboard is Hong Kong, a small Asian financial center known for its small apartments and high rents. It is worth noting that it is the only one Chinese Market covered in the report.

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Hong Kong, which regularly makes the ‘most expensive’ charts, has the lowest home ownership rate of all the cities surveyed, at just 51%, compared to Asian rival Singapore where home ownership exceeds 89% due to a decades-long government commitment. To public housing.

Hong Kong may be the most affordable city in the world, but potential homebuyers may be encouraged to know that it’s no longer as expensive as it used to be.

House prices fell during the pandemic in 2020, when the government closed city limits and imposed a coronavirus-free policy, as well as new national security laws that had a chilling effect on the city.

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Tourists look out over Hong Kong’s Victoria Harbor and the city’s skyline on July 10, 2023.

The report measures affordability using the price-to-income ratio of the median home price divided by the median total household income.

He links the rise in working from home during the pandemic to a “demand shock” to homes outside city centres, which have more outdoor space. But he also blames rising housing prices on land-use policies, including “urban containment,” a type of planning designed to stop urban sprawl.

“The middle class is under siege, mainly due to escalating land costs. With land legalization in an attempt to reduce urban sprawl, the excess demand over supply has pushed up prices.

Prices rose even further as investors jumped into the market to make a profit.

One solution, the report’s author wrote, is to look to New Zealand.

In an opinion article by L Canada Financial PostWendell Cox, senior fellow at Frontier Center for Public PolicyHe called on Canada, in particular, to follow New Zealand’s lead and free up more land for immediate development.

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An airplane flies over the Canadian National Tower and the Toronto skyline on September 14, 2023.

Vancouver and Toronto both made the list of “unaffordable” cities.

Cox points to the “housing growth orientation” policy introduced by New Zealand’s coalition government, which commits local authorities to immediately earmark housing growth for 30 years.

“Toronto and Vancouver show that the cost of taming expansion is unacceptably high: inflated house prices, rising rents, and poverty for increasing numbers of people,” Cox wrote.

For those who can’t wait for a change in policy or a drop in demand, the report also identifies the most affordable cities among the 94 cities surveyed around the world.

They are Pittsburgh, Rochester, and St. Louis in the United States; Edmonton and Calgary in Canada; Blackpool, Lancashire and Glasgow in the United Kingdom; Perth and Brisbane in Australia.

The report was compiled by researchers from the Center for Demography and Policy at Chapman University in California and the Frontier Center for Public Policy, an independent public policy think tank in Canada.

  1. Hong Kong
  2. Sydney
  3. vancouver
  4. San Jose
  5. Los Angeles
  6. Honolulu
  7. Melbourne
  8. San Francisco/Adelaide
  9. San Diego
  10. toronto

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