Okay Californians: We hate to be the ones to tell you this, but you’re paying a major premium for living in the Golden State. In fact, according to the top 10 most expensive cities list from this report, more than half of the places mentioned for being "severely unaffordable" are in the state of California.
That’s right: According to statistics, these cities aren't just the most expensive in the US; they're the most expensive in the world.
The extensive housing affordability survey measured middle-income housing affordability across 92 major metropolitan housing markets in Australia, Canada, Hong Kong, Ireland, Japan, New Zealand, Singapore, the United Kingdom, and the United States. Researchers ranked the list (which includes megacities Tokyo-Yokohama, New York, Osaka-Kobe-Kyoto, Los Angeles, and London) by dividing the median house price by the median household income in each place. For example, if the median house costs $250,000 and the median household income is $50,000, the median multiple would be 5.
The breakdown looks like this: Affordable locations are deemed those with a 3.0 or under, while severely unaffordable locations (those that made the top 10 list) are those that rank 5.1 and over. And since millennial buyers represent over one-third of the buying population, this is discouraging news for young people looking to move to La La Land or elsewhere.
Let’s put all those numbers in perspective for a state like California, where it seems like housing costs are rising alarmingly above the rate of household income.
6. Salinas, the suburban area located just outside the southern portion of the Greater Bay Area, ranked a median multiple of 9.1.
5. San Francisco ties with its neighbor Salinas at a 9.1 median multiple.
4. Los Angeles, home of Hollywood and many celebrity homes, gained a median multiple of 9.4.
3. Santa Barbara also has a median multiple of 9.4.
2. San Jose is up there as one of the least affordable housing markets in all of the US, with a median multiple of 10.3.
1. And Santa Cruz tops the charts with another severely unaffordable median multiple rating, at a whopping 10.4.
The reasoning behind this? California’s extraordinarily high prices are fit only for the seemingly high-class elite. The report reveals that the lack of affordable housing options contributes to California’s exceeding poverty and homelessness rates—which happen to be the highest in the nation. California’s housing affordability has deteriorated so much in the past few years that San Jose has now surpassed its unaffordability peak from the mid-2000s financial crisis—a stock market crash brought on by a major national housing bubble.
Globally, up until now, “available data shows that house costs have generally risen at a rate similar to that of household incomes until comparatively recently,” according to the study. But California’s “ominous” housing trend suggests that housing is becoming far too expensive for anyone but the upper class.
And the unfortunate financial prognosis doesn’t just apply to California: According to the report, there are eight additional severely unaffordable major housing markets in the United States, including Miami (6.5), Seattle (5.9), Denver (5.7), New York (5.7), and Riverside-San Bernardino (5.7).
So, if you’re looking for a more affordable option, you may want to look into Youngstown, Ohio, or Utica, New York, instead—they were rated some of the most affordable cities in the US. And if you’re thinking global, turn to our neighbors: Canada has five of nine most affordable markets.
See more home-buying news:
Are You Ready to Buy a Home? Here’s How to Tell
This Is the Cheapest State for Millennials to Buy Homes
It Looks Like Millennials Won't Be Buying More Homes in 2018
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