The San Francisco and San Jose metropolitan areas continue to rank among the most unaffordable housing markets globally, according to a recent report by Chapman University’s Center for Demographics and Policy, the Canada-based Frontier Centre for Public Policy, and urban policy analyst Wendell Cox.
In 2023, the San Francisco metro area was identified as the ninth most unaffordable region out of nearly 100 major housing markets worldwide. This ranking, based on the Demographia International Housing Affordability report, highlights the significant economic challenges facing prospective homeowners in the region. Despite a slight improvement from previous years, with a housing affordability score of 9.7, San Francisco remains categorized as “impossibly unaffordable.” This score represents a decline from its peak in 2021 when median house prices were nearly 12 times the median household income.
Meanwhile, the San Jose metro area, which was once on par with San Francisco in terms of affordability, has seen its housing market deteriorate further. In 2023, San Jose was ranked fourth globally for housing unaffordability, with a score of 11.9. Although this marks a slight decrease from 2021, when the score was 12.6, it reflects ongoing challenges exacerbated by pandemic-driven demand for suburban housing in the South Bay area.
The report underscores that housing affordability in these regions is determined by the ratio of median house prices to median household incomes. Only a handful of markets globally meet the affordability threshold, where housing costs are no more than three times the median household income.
Wendell Cox, a long-time researcher behind the report, attributes the affordability crisis in these regions to restrictive land use policies. These policies prioritize urban density over expanding city boundaries for development, thereby constraining housing supply and perpetuating rising costs. Cox argues that without substantial changes to land use regulations to facilitate more housing development, affordability challenges will persist.
While some advocate for expanding development into rural areas to alleviate housing shortages, others emphasize increasing residential density within existing urban areas. This debate continues amid concerns over environmental impacts and public health considerations associated with urban sprawl.
Despite efforts by various stakeholders to address these challenges, the housing affordability crisis in San Francisco and San Jose underscores the complex interplay between policy, economics, and urban planning that shapes the housing landscape in these high-demand metropolitan areas.
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