The top five major North American cities with the highest home prices compared to income available to buy a home are on the west coast, with Vancouver taking the fifth spot. Toronto and Mississauga On finished 9th and 10th respectively, according to a new study from Remitly.
Remitly analyzed cities across the continent looking at property prices, average salaries, mortgage rates, interest rates, downpayments/deposits and more to unearth where the most and least affordable places to purchase a home are. It then determined how many square feet in the average sized home could be purchased with the available finances.
California cities took the top four spots, with San Jose, home of some of the largest tech firms in the USA.
The Remitly study found even a couple, earning the local average salary of USD$86,605 and pooling their funds would barely be able to afford half (54.6%) the average property in San Jose.
In the #2 spot, the homes of celebrities: Los Angeles.
“One of the most iconic cities in the U.S. and home to some of the world’s richest and most famous celebrities, the city stands out as one of the hardest places to buy a home in our dataset,” said Remitly, in a press release. “For the average LA resident, the dream of homeownership feels out of reach, as even modest homes come with million-dollar price tags”
“Despite strong local incomes, thanks to a thriving economy built around entertainment and technology, couples earning the local average salary USD$60,656, could just about afford 56.4% of the average home.”
Close to LA, but with a much more laidback lifestyle, is Long Beach, taking third.
“Long Beach is often seen as a more affordable alternative to LA. However, globally, it’s still one of the least affordable cities to buy a home in,” said Remitly. “Single buyers, earning the average income, can’t quite afford 31.7% of the average home, thanks to pricey properties which have surged over recent years, now making it increasingly more difficult to get a foot on the ladder. Even coupled up, residents would have to really stretch their finances by making larger deposits or delaying the purchase process altogether.”
Further south along the coast and in fourth spot is San Diego.
“Famed for its beaches, year-round sunshine and relaxed coastal lifestyle, settling down in this desirable destination comes at a cost,” said Remitly, adding even though San Diego boasts strong local salaries and a thriving tourist-based economy, a strong military presence and technology, property prices are among some of the highest in the country.
“This means even modest homes are out of reach for many aspiring buyers,” said Remitly. “Those hoping to buy a home in the area need to make larger down payments or rely on family support to secure their forever home.”
And, number five, Vancouver, BC.
“Often hailed as one of the most beautiful cities in the world, thanks to being surrounded by mountains and ocean, the cost of homeownership in the city remains out of reach for many,” said Remitly. “Our study shows that a single buyer, earning on average CAD$54,778, would be able to afford only 34.9% of an average property and even a couple can only afford almost 70%, meaning those wanting to settle down in the city either have to rely on large deposits, help from family, or turn to the rental market instead.”
Remitly also sought out the most affordable housing markets in North America, finding no coastal cities nor Canadian cities making the list and highlighting the top four markets in the USA.
"There are some cities inland where homeownership is less of a distant dream and more achievable for many,” said Remitly. “Detroit MI is the most affordable city in the US in our analysis, where couples, who both earn the average salary, could afford nearly five times the cost of an average home.”
“Memphis TN, Baltimore MD and Oklahoma City OK, make up the top four most affordable places to buy a home, where even those buying alone can make their dream of purchasing a property a reality.”
Average property prices were sourced manually from a range of credible, market-specific sources, including national statistics agencies and real estate databases.
All property prices were recorded in their local currencies before analysis. Property taxes were not included in the analysis, as they vary significantly between locations and could introduce inconsistencies.
Average annual income figures were obtained from reliable national and regional datasets, including: United States: U.S. Census Bureau (American Community Survey) and Neilsberg analysis and in Canada: Statistics Canada and the Fraser Institute