Chapman University Center for Demographics and Policy and The Frontier Centre for Public Policy presents the 2024 edition of Demographia International Housing Affordability, authored by Wendell Cox.
The annual report provides housing affordability ratings for the third quarter of 2023 in eight nations: Australia, Canada, China, Ireland, New Zealand, Singapore, the United Kingdom and the United States, offering a comprehensive and up-to-date analysis of the housing affordability landscape.
Joel Kotkin, Director, Center for Demographics and Policy at Chapman University commented, “the study has grave implications for the prospects of upward mobility. High housing prices, relative to incomes, are having a distinctly feudalizing impact on our home state of California, where the primary victims are young people, minorities, and immigrants. As with any problem, the first step towards resolution is to understand the basic facts. This is what the Demographia study offers, and why we are so proud to partner with Canada’s Frontier Centre for Public Policy. Now comes the hard part: convincing policymakers to change directions before the new generation loses all hope of home ownership.”
Key Findings
- 2023 Highlights:
- Least affordable (rated impossibly unaffordable) include: Hong Kong (16.7), Sydney (13.8), Vancouver (12.3), San Jose (11.9) and Los Angeles (10.9), and Melbourne at 9.8.
- United States: Pittsburgh, PA, is the most affordable market with a median multiple of 3.1 (rated moderately unaffordable), followed by Rochester, NY, and St. Louis, MO-IL, at 3.4, and Cleveland, OH, at 3.5. Other moderately unaffordable markets include Buffalo, NY; Detroit, MI; Oklahoma City, OK; Cincinnati, OH-KY-IN; and Louisville, KY-IN
- Canada: Edmonton is highlighted as a moderately unaffordable market.
The Housing Affordability Crisis: Causes and Solutions
Middle-income households are facing rapidly escalating housing costs, which significantly contribute to the current cost-of-living crisis. Historically, home prices rose at a pace similar to income growth, making homeownership accessible. However, in many high-income nations, housing costs now far outstrip income growth.
Primary Causes
- Land Use Policies: Restrictive land use policies are a principal driver of the housing affordability crisis. These policies limit housing supply, driving up land prices and making homeownership unattainable for many.
- Urban Containment: Policies like greenbelts, urban growth boundaries, and densification aim to limit urban sprawl and increase density. While intended to improve urban environments, they often result in severe land shortages and skyrocketing housing costs.
Economic Dynamics
Land values increase closer to urban centers, with urban containment policies causing abrupt value spikes at established boundaries. Research shows that land prices inside these boundaries can be 8-20 times higher than those outside.
New Zealand’s Reforms: A Potential Model
New Zealand has introduced policies aimed at increasing land supply to meet demand, providing a hopeful example for other nations grappling with housing affordability issues.
A Focus on People
The report advocates for prioritizing the well-being of people over rigid urban planning ideals. Planning policies should enhance economic opportunities and support middle- and lower-income households.
Joel Kotkin, Director, Center for Demographics and Policy at Chapman University, is available for comment this week.
About Chapman University
Founded in 1861, Chapman University is a nationally ranked private university in Orange, California, about 30 miles south of Los Angeles. Chapman serves nearly 10,000 undergraduate and graduate students, with a 12:1 student-to-faculty ratio. Students can choose from 123 areas of study within 11 colleges for a personalized education. Chapman is categorized by the Carnegie Classification as an R2 “high research activity” institution. Students at Chapman learn directly from distinguished world-class faculty including Nobel Prize winners, MacArthur fellows, published authors and Academy Award winners. The campus has produced a Rhodes Scholar, been named a top producer of Fulbright Scholars and hosts a chapter of Phi Beta Kappa, the nation’s oldest and most prestigious honor society. Chapman also includes the Harry and Diane Rinker Health Science Campus in Irvine. The university features the No. 4 film school and No. 60 business school in the U.S. Learn more about Chapman University: www.chapman.edu.
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