Two cities in the Bay Area have been highlighted for having some of the most unaffordable housing markets globally.
San Jose and San Francisco ranked third and eighth, respectively, in a study conducted by Chapman University and the Canadian think-tank Frontier Centre for Public Policy.
The researchers reviewed housing affordability across 95 major markets globally, identifying San Jose and San Francisco as part of a select group struggling with extreme housing costs.
California was the only state in the United States represented on this list.
The study found 12 cities across eight countries listed as having ‘impossibly unaffordable’ housing markets, with four of those cities located in California.
In addition to San Jose and San Francisco, Los Angeles ranked fifth, while San Diego was also included at eighth.
The report highlights serious concerns regarding the affordability of housing in these cities, labeling them an ‘existential threat’ to middle-income households.
Historically, middle-income homeownership was more common in high-income countries, with home prices generally more compatible with household incomes.
However, since the 1990s, prices in these urban centers have skyrocketed, driven significantly by urban containment strategies that restrict expansion, particularly in cities like San Francisco and Sydney.
The current housing market prices in these locations now reflect ratios of 9–15 times the median household income.
This significant shift in affordability has prompted middle-income families to leave cities in search of more affordable housing options.
As noted in the report, people are “voting with their feet” to escape deteriorating affordability in their urban centers.
The researchers anticipate that this migration trend will persist unless substantial policy changes are implemented.
To evaluate housing affordability, the study employed the median multiple metric, a price-to-income ratio that divides the median house price by the median household income.
The designation of ‘impossible’ was chosen to emphasize the substantial barriers faced by middle-income households trying to secure housing at a median multiple of 9.0, a threshold that did not exist over thirty years ago.
In contrast, the ranking of cities also revealed a selection of the most affordable housing markets.
Pittsburgh, Pennsylvania, emerged as the most affordable city for the fifth consecutive year, reflecting a stark contrast with the housing situation in San Jose.
In fact, the cost of housing in San Jose is four times higher than in Pittsburgh.
The latest report marks the 21st edition of this annual analysis, underscoring the ongoing decline in housing affordability.
Housing costs significantly affect many families’ financial well-being, contributing to the current cost of living crisis.
David Leis, the President of the Frontier Centre for Public Policy, noted that the deteriorating affordability of housing remains a primary challenge for middle and working class families.
He emphasized the urgent need for substantial measures to restore housing affordability across numerous urban markets worldwide.
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