New comparative international housing affordability statsRecently released. Houston ranks as the 21st most affordable housing market in the U.S., with the median house only 2.9 times the median income. I find it odd that Atlanta, DFW, and Austin all came in slightly ahead of us at a multiple of 2.8. Digging a little deeper, it looks like their housing is more expensive, but they have somewhat higher median household incomes so they get a slightly better multiple. They have the Houston median house at $145,100, and the median household income at $50,400.
But the differences between those cities is a quibble vs. the most unaffordable multiples: LA 11.2, San Diego 10.8, Honolulu 10.6, SF 9.3, Miami 8.8, and NY 7.9. Most major cities in the UK, Ireland, Australia, NZ, and Canada are pretty pricey too. Ireland and the UK are particularly scary once you look at their per sq.ft. figures, as their average houses are less than half our size. I'm not too surprised, as The Economist has been talking about an international housing bubble for some time.
Housing Affordability: The Policy Imperative
In summary, the unprecedented housing affordability crisis could represent a threat to prosperous economies. Research indicates that the crisis may be, in large part, a consequence (negative externality) of the excessive land use regulation that has been adopted in many markets. Severe land use regulations have generally been adopted without any understanding of their ultimate impacts on housing affordability. Indeed, these effects have often not been considered at all. Where housing affordability concerns have been raised, the typical response has been denial rather than informed and objective analysis.
Nonetheless, a considerable body of evidence indicates that the housing affordability crisis is not result of natural market force. The principal cause seems to be excessive land use regulation that strangles housing markets and drives prices upward at rates far higher than can be attributed to economic trends. Economics teaches that scarcity tends to raise prices, a principle that applies to virtually all products and services, including houses and land.
The loss of affordability is so immense that policies such as affordability quotas, first home buyer grants, workforce housing or tax relief programs cannot possibly make a material difference, despite their rhetorical attractiveness in some circles.
Economist Raven Saks of the US Federal Reserve Board has published research indicating the potential for economic loss in excessively regulated markets. The Joint Center for Housing Studies of Harvard University summarized the research as showing that metropolitan areas "… with stringent development regulations generate less employment growth than expected given their