The Unassuming Economist

From New Geography:

“The Urban Reform Institute has published the 2021 edition of Demographia United States Housing Affordability, which rates middle-income housing affordability in the third quarter 2020. Demographia United States Housing Affordability is a supplement to Demographia International Housing Affordability, which covers 92 major housing markets (1,000,000 or more population) in 8 nations (Australia, Canada, China [Hong Kong only], Ireland, New Zealand, Singapore, the United Kingdom and the United States). The Demographia United States Housing Affordability provides ratings in 188 markets, including the 56 major metropolitan areas included in the earlier report.

Over the past year, housing affordability has deteriorated. Urban Reform Institute President Charles Blain noted: “It is not surprising that housing affordability — given the large influx of new buyers, particularly in suburban and outlying areas — has continued to deteriorate. As a result, many low-income and middle-income households who already have suffered the worst consequences from housing inflation will see their standards of living further decline.”

Rating Housing Affordability (The Median Multiple)

Demographia rates middle-income housing affordability in four categories, ranging from the most affordable (“affordable”) to the least affordable (“severely unaffordable”), as is indicated in Figure 1. As late as the 1990s price-to-income ratios were at or below 3.0 in Australia, Ireland, New Zealand, the United Kingdom and the United States, in markets rated “affordable. Since then, there has been a substantial divergence in affordability between major markets, which research has associated with stronger land use regulation (especially urban containment). The range between least affordable and most affordable markets rose by more than four times from 1969 to 2020 (Figure 2).”

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