Los Angeles, Long Beach and San Diego are among the world’s least affordable cities for homebuyers, a recent report says.
When the price of a regular home is compared to regular local salaries, Los Angeles, Long Beach, San Diego and San José were among the five least affordable cities in the world, according to a survey from financial services provider Remitly conducted late last year.
Relative to local pay scales, the cities are more expensive for homebuyers than New York, Paris and Singapore, Remitly’s analysis says.
In Los Angeles, a single buyer earning the local average salary could afford a home worth only 28% of the average property in the region, according to the survey. Residents of San José can afford to buy a home worth only about a quarter of the average.
“This could mean they would have to stretch themselves financially, often finding larger down payments or asking for financial help from family to be able to make their dream of owning a home a reality,” the report said.
Two additional Bay Area cities appeared on the “20 least affordable” list. San Francisco came in at 10th place, while Oakland ranked 19th.
California homes are about twice as expensive as the typical midtier U.S. home, according to a recent report from the state Legislative Analyst’s Office. As of December, the average home price in California was $755,000, the report said.
Researchers looked at property prices, average salaries pre-tax, mortgage, interest rates and down payments and deposits to compare housing affordability across 151 cities in 11 countries.
Countries were chosen as they ranked in Remitly’s previous study of the most popular countries to move to. The study included the 50 U.S. cities with the highest populations. It excluded the United Arab Emirates and Japan because of insufficient data. The only Asian city the researchers included was Singapore.
Property prices were taken from national statistics agencies and real estate databases, the study said. Income figures were from national and regional datasets.
Detroit — where a person making the local average salary could afford more than two times the average property price — was named the world’s most affordable city to become a homeowner. It was the only U.S. city to make it onto the list, which otherwise consisted of German and Italian cities.
Michael Lens, professor of urban planning and public policy at UCLA, said the “writing has certainly been on the wall” for California’s housing market to be considered the most expensive in the world.
California’s draws include its “unparalleled amenities” and strong job market, Lens said. But “we make it very challenging to build enough homes to satiate the demand,” he said.
“That combination of low supply and relatively high affluence for some parts of our country make the baseline of an entry-level home very expensive,” Lens said.
Detroit’s ranking as the most affordable city in Remitly’s list reflects the city’s decades-long population loss, driven by white flight and a decline in the auto industry, Lens said. Vacancy rates are high because it was built to house a population that was once much larger.
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