In recent years, the housing market in the United States and around the world has become increasingly unaffordable for many potential home buyers. A new report has highlighted this issue by categorizing certain major cities as “impossibly unaffordable.”
According to the annual Demographia International Housing Affordability report, US cities on the West Coast and Hawaii claim five of the top 10 spots for the most unaffordable places to buy a home. The report, which has been tracking house prices for two decades, compares average incomes with average home prices and attributes the soaring prices to pandemic-driven demand, land use policies, and investor activity in the market.
Unsurprisingly, California dominates the list of the most expensive US cities to purchase a home, with San Jose, Los Angeles, San Francisco, and San Diego all ranking in the top 10. Honolulu also made the list, coming in sixth place among 94 major markets surveyed in eight countries.
On a global scale, Hong Kong tops the leaderboard as the least affordable city worldwide. Despite its high prices, Hong Kong has seen a slight decrease in house prices during the pandemic, attributed to border closures and a zero-Covid policy imposed by the government.
The report measures affordability using a price-to-income ratio and suggests that the rise in remote work during the pandemic has led to a demand for houses outside city centers with more outdoor space. However, the report warns that urban containment policies and investor activity have also contributed to the escalating prices.
One proposed solution, as suggested in an opinion piece by a senior fellow at the Frontier Centre for Public Policy, is to follow New Zealand’s lead in freeing up more land for immediate development. By zoning for 30 years of housing growth, New Zealand has seen success in addressing housing affordability issues.
Overall, the report sheds light on the challenges faced by potential home buyers in major cities around the world and underscores the need for policy changes to address the growing unaffordability crisis.
