Metro Detroit ranks most affordable
The most affordable living out of 86 major cities across four continents is right here in Metro Detroit, according to an annual international housing survey published Tuesday.
The Demographia International Housing Affordability Survey found 14 affordable major metropolitan markets — all in the United States — with Detroit in the top spot. Grand Rapids was also on the list, in a three-way tie for fifth place with Cincinnati and Pittsburgh.
The U.S. also had the highest number of cities on the list of the 10 least affordable metropolitan markets. Hong Kong was the least affordable city, but San Francisco, San Jose and San Diego and Los Angeles also made the list.
Detroit also made the Top 10 of most affordable overall markets, out of 378 localities surveyed, at No. 6. Limerick, Ireland, tied for first place for affordability with Rockford, Ill.; Terre Haute, Ind.; Utica, N.Y.; and Youngstown, Ohio.
The survey looked at the overall Wayne-Oakland-Macomb counties area.
“We look at housing affordability because it represents the largest element of the household budget,” said Wendell Cox, who runs Demographia, the St. Louis-based public policy and demographics consultancy that conducted the survey. “What happened in a lot of places is that you’ve seen housing prices double and triple relative to incomes, and this hugely reduces discretionary incomes and increases poverty.”
One thing most affordable locations have in common is that they’ve resisted the trend to “smart growth” planning policies designed to increase density and steer development to limited areas in each city, Cox said.
“You have this urban containment planning policy, also called smart growth, and the same thing happens as happens when OPEC decides to cut oil production — when you create a scarcity of something your force the price,” Cox said. “Every single one of the metro areas that we looked at where there is severe unaffordability has these kind of urban planning policies. It really is completely a function of urban planning policy gone wrong. ”
Australia had the largest number of severely unaffordable markets, with 33 out of 51 communities offering housing at a multiple of more than five times the local median income. In the U.S., 25 out of 242 markets had severely unaffordable markets, and the United Kingdom had 16 out of 33.
In Metro Detroit the affordability survey found house prices at about twice the median annual income, below the affordable level of three times median income.
As the city moves forward after bankruptcy, Detroit should focus on making itself safe and attractive in ways that won’t push housing prices beyond the means of most buyers, Cox said. He maintains that can only be done by rejecting “smart growth” policies.
“Detroit’s only hope in the long run, if it can make things safe, is housing affordability,” Cox said. “Urban planning these days is all about telling you how to live when you get there.”
Home, cheap home
The Demographia survey ranked major metropolitan areas on housing affordability based on the ratio of median house price to median annual household income. Ranking reflects several ties.
1. Metro Detroit …2.1
2. Rochester, N.Y. …2.4
3. (tie) Buffalo, N.Y. …2.6
3. (tie) Cleveland, Ohio …2.6
5. (tie) Cincinnati, Ohio …2.7
5. (tie) Grand Rapids …2.7
5. (tie) Pittsburgh …2.7
5. (tie) Saint Louis, Mo. …2.7
9. (tie) Atlanta …2.9
9. (tie) Indianapolis, Ind. …2.9
9. (tie) Kansas City, Mo. …2.9
9. (tie) Louisville, Ky. …2.9
13. (tie) Columbus, Ohio …3
13. (tie) Oklahoma City, Okla. …3
Source: Demographia International Housing Affordability Survey