Here are the most and least affordable major cities in the world
Pittsburgh is well-known for its steel industry and for bringing ketchup to the French fry-loving masses. As it turns out, it is also one the most affordable places in the world, according to a new study.
In a report on international housing affordability by Chapman University and Frontier Centre for Public Policy, a Canadian think tank, Pittsburgh earned the title of most affordable among 94 major metropolitan areas in eight countries. Researchers based their ranking on median home price and median household income data from 2022.
Using a metric in the housing sector known as the price-to-income ratio, researchers divided the median home price of a community by the median household income of its residents to determine an affordability score for each city in the study. Cities with scores above 9 are considered "impossibly unaffordable" for residents. Pittsburgh earned a 3.1 score while Rochester and St. Louis both received a 3.4.
In cities like Charlotte, North Carolina; Boise, Idaho and Phoenix, home prices spiked dramatically after the pandemic and took months to cool down. But that same trend did not happen in Pittsburgh, Michael Reed real estate agent for Coldwell Banker Realty told CBS MoneyWatch, adding that home prices in the city have remained steady in recent years.
Steady home prices, combined with solid incomes in the health care and technology sector, have kept Pittsburgh affordable, Reed said, though prices could eventually rise as aging residents outbid with younger buyers on smaller houses.
"A lot of our older population is downsizing and that group tends to be cash heavy and they fare better on the market than our younger, newer buyers," Reed said. "So that could begin pushing our prices up."
The median home sale price in Pittsburgh was $235,000 as of May, down nearly 8% from a year ago, according to online real estate brokerage Redfin.
Throughout most of the country, the housing market has been tough sledding for both buyers and sellers this year as home prices reach record highs and mortgage rates hover around 7%. The median U.S. home price hit an all-time high last week of $394,000, up 4.4% from a year ago, according to Redfin.
Home prices rising faster than income worldwide
To be sure, rising home prices are not a uniquely American issue, said Wendell Cox, the study's author.
"For decades, home prices generally rose at about the same rate as income, and homeownership became more widespread," Cox said in the study. "But affordability is disappearing in high-income nations as housing costs now far outpace income growth. The crisis stems principally from land use policies that artificially restrict housing supply, driving up land prices and making homeownership unattainable for many."
Despite those issues, the U.S. is home to nine of the 10 most affordable cities in the Chapman study. Conversely, five U.S. cities ranked among the study's top 10 least affordable cities. Hong Kong is the world's least affordable city, with a score of 16.7. Sydney, Australia, is a distant second with 13.3, followed by Vancouver with 12.3.
Here are the most affordable major cities in the world, according to the Chapman study:
1. Pittsburgh (U.S.)
2. Rochester, New York (U.S.)
3. St. Louis (U.S.)
4. Cleveland (U.S.)
5. Edmonton, Alberta (Canada)
6. Buffalo, New York (U.S.)
7. Detroit (U.S.)
8. Oklahoma City (U.S.)
9. Cincinnati (U.S.)
10. Louisville, Kentucky (U.S.)
Here are the least affordable major cities in the world, according to the Chapman study:
1. Hong Kong (China)
2. Sydney, New South Wales (Australia)
3. Vancouver, British Columbia (Canada)
4. San Jose, California (U.S.)
5. Los Angeles (U.S.)
6. Honolulu (U.S.)
7. Melbourne, Victoria (Australia)
8. San Francisco (U.S.)
9. Adelaide, South Australia (Australia)
10. San Diego (U.S.)