Florida, California & Hawaii Include Many of World’s Least Affordable Housing Markets
By now, it’s almost old news that soaring home prices in Florida, California, Hawaii and the Northeast have locked millions of residents out of the local housing market, including well-paid middle-class workers.
But now comes a new international survey of affordable housing that drives home, so to speak, just how unaffordable homes in places such as Palm Beach County, Fla., really are, reports the Palm Beach Post.
A new international survey by Demographia examined 159 housing markets in the United States, the United Kingdom, Canada, Ireland, Australia and New Zealand.
Of all those countries, Palm Beach County has the 14th-least-affordable housing market in relation to local median income - creating a whole host of problems for even well-paid people such as health care workers to find housing - the survey says.
Palm Beach County officials have documented that the ratio of median home prices to median income in the county is 7-1. Federal guidelines say the ratio of home price to income should be no more than 3-1 to avoid being “cost-burdened.”
The local housing council’s survey in 2006 showed that 90 percent of Palm Beach County workers could not afford to buy the median-priced home, which was about $393,000 at the time. Demographia used third-quarter 2006 housing prices and income.
With sky-high Florida mortgage costs more than most families can bear, Palm Beach County home prices were 7.6 times the area median income.
The survey says that markets with at least a 5.1-1 ratio of home prices to median income are severely unaffordable. With ratings over that threshold, buyers just can’t get themselves into position qualify for home loans.
The least affordable markets, not surprisingly, were in California and Hawaii. With California mortgage loan costs regularly reaching half a million for median-priced homes, Los Angeles was No. 1 on the unaffordable list with a median multiple of 11.4, while San Diego was No. 2 at 10.5.
The fast-growing Honolulu housing market was torrid enough to rank Hawaii’s capital city at No. 3 with a median multiple of 10.1.
The Miami-West Palm Beach area had the least affordable housing in relation to income of all metro areas in Florida, according to the survey. Sarasota also joined the undesirable list, coming in at No. 23 at 6.6.
On the other end of the spectrum, Fort Wayne, Ind., was the most affordable housing market among all the markets surveyed, domestic and international, with a median multiple of 2. Housing in Fort Wayne costs twice the median income - well below the federal guidelines established for housing costs.
But who wants to live in Fort Wayne, right?
If housing costs don’t come back down to earth in many U.S. markets, you might see Indiana mortgage activity spike. Florida and California are in danger of losing their economic backbone in the next decade if working class professionals cannot afford housing.