A recent report from the Demographia International Housing Affordability Survey (DIHA) shows once again that everything is relative and that real estate is first and foremost, always a local issue. The DIHA 2017 measured affordability in 406 metro markets in nine countries around the world and despite nationwide concerns about housing affordability in the United States, found that U.S. cities occupied all of the top 10 slots (actually 11, since there were several ties) in the most-affordable housing rankings. Not surprisingly, four U.S. cities also made the “priciest places to live” list with San Jose, California, ranking fifth, Honolulu, Hawaii, ranking seventh, Los Angeles, California, ranking eighth, and San Francisco, California, ranking ninth.
The DIHA compared metro areas in Australia, Canada, China (Hong Kong), Ireland, Japan, New Zealand, Singapore, United Kingdom, and the United States. Oliver Hartwich, executive director of the New Zealand Initiative (NZI) and author of this year’s study introduction, noted that in his opinion, extreme price levels in housing markets are “unacceptable.” In fact, he went so far as to say, “High house prices are not a sign of a city’s success, but a sign of failure to deliver the housing that its citizens need.” He added that the key to a truly successful housing market (which he defined generally as a market like Germany’s in which “nothing ever happens” and housing prices remain basically unchanged for decades) is the expansion of residential areas over time. Interestingly, while some of the U.S. cities on the most-affordable list certainly have expanded their residential areas, the list also boasts some metros that are suffering because their residential footprint is too large for their population (Detroit).
Here is the list of U.S. cities that topped the DIHA 2017 results for most-affordable housing:
- Rochester, New York
- Buffalo, New York
- Pittsburgh, Pennsylvania
- St. Louis, Missouri
Oklahoma City, Oklahoma
- Kansas City, Missouri/Kansas
Grand Rapids, Michigan
Of the 11 affordable “major housing markets” identified by the survey, all were located in the United States. Of the 29 “severely unaffordable major housing markets” identified by the survey, five were in Australia and included every major housing market on the continent, New Zealand and China had one each. The U.S. had a total of 13 (of the total of 54 markets evaluated in the country) and the U.K. had seven, one-third of the total U.K. markets evaluated.
The DIHA also took on other publications that publish “best cities” reports, saying these reports are aimed “at the high end of the housing market [and] virtually never evaluate housing affordability.” The authors went on, “In fact, a city cannot be livable nor can it be a best city to middle-income households who cannot afford to live there.” As an example, they compared Dallas-Fort Worth, Texas, and Toronto, Canada. Toronto was rated a “best city” by The Economist in 2016 but, DIHA authors argued, that rating is largely relevant to luxury buyers rather than middle-income earners. Furthermore, they argued, traffic congestion, a major factor in low livability rankings for commuters, who tend to be middle-income earners, is far better in the Dallas area despite Toronto’s “most favored urban strategies” for traffic, which Dallas does not implement.
You can read more of Carole’s coverage of this and other topics at Self-Directed Investor News.
About the Author
Carole VanSickle Ellis serves as vice president of research and analysis at the Self-Directed Investor Society, helping investors “declare independence from Wall Street.” Contact her at firstname.lastname@example.org or visit sdiradio.com.