U.S. cities continue to lead housing markets globally in affordability, accounting for 82 of the top 99 most affordable markets of all sizes, according to the 2017 Demographia International Housing Affordability Survey.
The survey calculates affordability by using the mean multiple, or the ratio of median house price to median pre-tax annual household income. Although a common way to determine middle-income affordability in housing, it doesn’t account for the size or quality of the properties, the authors note.
Off all cities measured, Racine, WI, was ranked the most affordable place to live in the world, followed by Bay City, MI, and Decatur, IL. Of major markets — cities with a population over 1 million — the top 17 are in the U.S., led by Rochester, NY, Buffalo, NY, and Cincinnati.
This is the fourth-consecutive year that U.S. cities have topped the list of the most affordable major housing markets worldwide.
While tight inventory on the West Coast is triggering affordability challenges there, the survey points to a concentration of affordable cities of all sizes away from the coasts, primarily in the Midwest and Rust Belt, suggesting that homebuilders in those regions could see growing demand as populations and job centers shift.
This jives with a November report from the National Association of Realtors, which noted that many of the least-expensive housing markets in the U.S. are in the Midwest, including Youngstown, OH, Cumberland, MD, and Decatur, IL. Youngstown and Decatur were both among the top 15 most affordable housing markets of all sizes in Demographia's report.
The Demographia survey notes that markets like Dallas and Fort Worth, TX, Houston and Atlanta were largely insulated against major price increases during the housing bubble and remain among the most affordable as a result of being liberally regulated.
This has helped attract new residents, supporting housing demand. Dallas–Fort Worth has seen a recent flurry of residential construction projects, among them Republic Property Group’s 7,200-acre Walsh master-planned community in October.
Three U.S. cities are among the top 10 least-affordable housing markets globally, according to Demographia: Santa Cruz, CA; Santa Barbara, CA; and San Jose, CA. Hong Kong was ranked as the least affordable housing market in the world for 2017.
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