Bay Area Cities Reach ‘Impossibly Unaffordable’ Housing Costs

Over the past two decades, buying a home has become significantly more challenging in many countries, particularly the United States. A new report underscores this sentiment by categorizing certain major cities as “impossibly unaffordable.”

The report examines the disparity between average incomes and home prices, highlighting factors such as increased demand for homes with outdoor space due to the pandemic, restrictive urban planning policies, and heightened investor activity, all of which have driven housing prices to unprecedented levels.

Among the top 10 most unaffordable cities identified by the annual Demographia International Housing Affordability report, US cities on the West Coast and Hawaii feature prominently. California cities like San Jose, Los Angeles, San Francisco, and San Diego are among the most expensive places to purchase a home. Honolulu in Hawaii also ranks sixth among 94 major markets surveyed across eight countries.

Australia joins the US in dominating the “impossibly unaffordable” list, with Sydney leading, followed by Melbourne and Adelaide. However, Hong Kong surpasses all others as the least affordable city globally, noted for its compact living spaces and exorbitant rents.

Despite its top ranking, Hong Kong has seen a slight easing in housing affordability following price decreases during the pandemic in 2020, compounded by stringent government policies and new national security laws.

The report attributes these soaring housing costs to a high price-to-income ratio, exacerbated by land use policies like urban containment, which limits urban sprawl but restricts land availability for development. Investor speculation has further inflated prices, intensifying the housing affordability crisis.

In response, the report suggests looking to examples like New Zealand’s approach of freeing up land for immediate housing development as a potential solution. Cities like Vancouver and Toronto in Canada, both on the “impossibly unaffordable” list, illustrate the consequences of constrained housing supply and high costs of living.

For those seeking more affordable housing options among the surveyed cities, the report identifies places like Pittsburgh, Rochester, and St. Louis in the US; Edmonton and Calgary in Canada; Blackpool and Glasgow in the UK; and Perth and Brisbane in Australia.

Compiled by researchers from Chapman University’s Center for Demographics and Policy and Canada’s Frontier Centre for Public Policy, the report highlights the urgent need for policy reforms to address the housing affordability crisis affecting major global cities.