WASHINGTON ― Would-be American home-buyers can take heart: U.S. housing is more affordable than in other English-speaking countries, according to a study of metropolitan areas around the world.
The median home price in the United States as a whole was three times pre-tax household income in the third quarter of 2011, on the cusp of what Demographia, a public policy firm which conducted the survey, deems “affordable.”
In major U.S. metropolitan areas, the ratio was 3.1, down from 4.6 in 2007, before the worst of the U.S. housing market slump that dragged the economy into recession, and 3.3 in 2010.
Detroit, at 1.4 times, was the most affordable big city in any of the 325 areas surveyed in six countries and in the Chinese territory of Hong Kong.
In contrast, the index was 12.6 in Hong Kong, by far the priciest market. And Canada, despite being larger in size than the United States with just one ninth of the population, continues to grow less affordable.
A ratio of 3 or less is considered “affordable,” according to Demographia which surveyed 325 metropolitan areas in Australia, New Zealand, Ireland, the U.K., the United States, Canada and Hong Kong.
“The bubble is over ― prices have continued to decline. We have housing prices back to where they’re supposed to be,” said Wendell Cox, principal of Demographia which is based in Belleville, Ill.
Not everywhere in the United States is housing looking like a good deal: the most unaffordable U.S. markets were San Jose (6.9), San Francisco (6.7), San Diego (6.1), New York (6.1), Los Angeles (5.7) and Boston (5.3), according to the survey.
Cox blamed stringent land use regulations for choking supply in many of the “unaffordable” U.S. markets, driving up prices.
Signs have appeared in recent months that the U.S. housing slump may have touched bottom and economists mostly expect prices to remain flat in 2012 before small gains next year.
After Hong Kong, Australia’s major cities were the most expensive at 6.7 times pretax median household income, followed by New Zealand at 6.4 and Britain at 5.0.