Potential homeowners in the US were more tightly squeezed by soaring prices and sagging wages than wanna-be homeowners anywhere else in the world during 2021.
Lack of Housing Affordability Hit US Would-be Homeowners Hardest
Spiking home prices are outperforming wage growth in cities all over the world.
Where are potential homeowners being hit the hardest? Would-be homeowners in the United States, according to a new analysis of the global housing market by the British-based service that matches brokers with homebuyers, Online Mortgage Advisor.
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Online Mortgage Advisor’s analysis found that many cities worldwide were less affordable for local workers in 2021 than they were in 2017 due to relatively flat wage growth and skyrocketing home prices.
Cleveland Ranked Least Affordable City in the World in 2021
Using 2021 home price and salary data from 218 cities around the world, Online Mortgage Advisor compared the average price of one square foot of an apartment in each city center to the average annual salary of local workers in that city.
The results? Cleveland ranked #1 as the most unaffordable city in the world! The average worker in Cleveland could afford to buy 289.7 square feet of space in their home city during 2021 – a huge plunge from the 496.3 square feet the average worker could afford to buy in 2017.
Cleveland’s average home prices jumped +134% between 2017 – 2021 and Cleveland’s average salary increased just +37% during these five years.
US Tendency Towards Less Affordability
Pete Mugleston, managing director of Online Mortgage Advisor, said in an email, “The US is seeing a tendency to become much less affordable due to soaring property prices, while salary growth is remaining relative flat.”
Mugleston pointed out that the increased demand for homes in smaller sized cities as reflected by a December 2021 report by the Pew Research Center has pushed up prices faster than wages have responded.
Mugleston said that the gap between average earnings and home prices in large American cities has, unlike in small-sized cities, dropped only slightly since 2017. “It was surprising to see how some of the larger, notoriously unaffordable cities, such as San Francisco and Los Angeles, have become more affordable over the past five years.”
10 Global Cities with Biggest Drop in Affordability All Within US
With Cleveland suffering the steepest decline in affordability for its local workers in the world during 2021, here is the full list of cities (all smaller-sized cities) with the biggest drop in affordability:
- Cleveland OH – down -206.6 square feet
- Oklahoma City – a decline of -182.1 square feet
- Jacksonville FL – down -130.2 square feet
- Boise ID – down -125.8 square feet
- Las Vegas – down -96.8 square feet
- Sacramento CA
- Reno NV
- Louisville KY
- Tampa FL
- Raleigh NC
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Thanks to Online Mortgage Advisor and The New York Times.