Dive Brief:
- For the sixth year in a row, and after breaking its own 2015 record, Hong Kong has earned the distinction of the city with the least affordable housing in the world at 19 times the median annual household income, according to a survey by public policy firm Demographia.
- Sydney is number two on the list, with housing at 12.2 times median household income, followed by Vancouver, British Columbia at 10.8 times. Coming as no surprise, given the area’s reputation for pricey digs, the two least affordable markets in the U.S. are San Jose, CA (9.7), and San Francisco (9.4).
- The survey considers urban areas with median home prices more than three times household income to be unaffordable and in danger of entering a housing bubble, according to CNN Money. Bubble concerns aside, the widening gap between home prices and income in Hong Kong is creating a vocal pushback regarding the resulting income inequality.
Dive Insight:
Of the 87 major metropolitan markets included in the survey, American cities topped a secondary list — most affordable. All with multiples of 2.6 are Cincinnati; Cleveland; Buffalo, NY; and Rochester, NY.
Although not many U.S. markets are pricey enough to make the "least affordable" side of Demographia’s list, affordability is definitely an issue in this country's housing market. Rising home prices dominated 2015's housing narrative. Potential homebuyers are often caught in the trap of paying higher rents while unsuccessfully saving for a down payment.
First-time homebuyers, who are more likely to be saddled with student debt, have delayed marriage and family, are living at home longer, and are contributing to the lowest share of first-time homebuyers in 30 years — approximately one-third of the housing market.
In its 2016 predictions, Zillow said this year will see a continued rise in both home prices and rental rates, deteriorating housing affordability even further. This lack of affordability, according to Zillow, will force more buyers into the suburbs and eliminate homeownership as an option entirely for the bottom third of U.S. wage earners.