A new report recently analyzed data to determine the most "impossibly unaffordable" housing markets in the world, four of which are in the United States.
In a report on international housing affordability published by Chapman University and Frontier Centre for Public Policy, researchers analyzed 94 major metropolitan areas in eight countries. The researchers used a price-to-income ratio and compared average incomes with average home prices to determine each metro area's affordability score. Those with scores above 9 are considered "impossibly unaffordable."
Which US Cities Are Deemed "Impossible Unaffordable?"
Topping the list among US cities is San Jose in California, with an affordability score of 11.9. The median income in San Jose in 2022 is $133,835, per the US Census Bureau. The median sale price in the city as of May 2024 is $1,500,000, according to Redfin.
Following San Jose is Los Angeles, which had a score of 10.9. The median household income is $82,516, while the median home price is $1,050,000.
The third US city on the list is Honolulu, Hawaii, with an affordability score of 10.5. The median income in Honolulu is $96,580, while the median home price is $475,000.
The fourth most unaffordable city in the US is San Francisco, with an affordability score of 9.7. Per the Census Bureau, the median household income in San Francisco is $136,692. The median sale price of homes is $1,403,500.
The last US city on the list of the 10 unaffordable cities in the world is San Diego, with an affordability score of 9.5. The median income in San Diego is $98,928, while the median sale price is $980,000.
Why These Cities Are Considered "Impossibly Unaffordable"
The report points to "urban containment policies" as one of the reasons why homes are unaffordable in these metro areas. The report said urban containment policies, which are designed to limit urban sprawl and increase density, resulted in higher land and home prices.
Furthermore, the report warned that the housing affordability crisis could pose an existential threat to the middle class, adding that the high housing costs have reduced the standards of living and increased poverty.
One solution suggested by the author is to look to New Zealand, which freed up more land for immediate development to decrease prices.
