These cities are 'impossibly unaffordable' for middle class, new report warns

Five cities in the U.S. have become "impossibly unaffordable" for the middle class, according to a new report.

Four of them are based in California, with San Jose topping the list as the worst. There, median house prices are 11.9 times higher than median household incomes, a metric described as the "median multiple."

A property is said to be "seriously unaffordable" when the median multiple exceeds 4.1, "severely unaffordable" after 5.1, and "impossibly unaffordable" above 9.

The figures come from the Demographia International Housing Affordability report, which has been tracking property prices over the past 20 years.

"This level of unaffordability did not exist just over three decades ago," the authors warned.

The median multiple stood at 10.9 in Los Angeles, 10.5 in Honolulu, 9.7 in San Francisco, and 9.5 in San Diego.

No mortgage provider would allow someone to borrow 10 times their annual earnings for a home loan, meaning homeownership is becoming increasingly out of reach for the middle class.

Meanwhile, the report labeled another 17 cities as "severely unaffordable."

Miami led the charge in this category with a median multiple of 8.1—with New York, Boston, Seattle, Portland, Las Vegas, Orlando and Phoenix just some of the others on the list.

The report also compared U.S. housing costs with those of major cities in seven other developed countries. Perhaps not surprisingly, the U.S. topped the list as the most affordable market internationally.

"Disastrous" for homebuyers

The Demographia report says that high housing costs "are largely the product of policies that seek to limit growth on the periphery, which has been the usual way that cities have grown."

The authors found evidence that such policies were in action across California, Washington, Oregon, and Colorado—and said, "the results are disastrous, at least for potential homebuyers."

This also has a knock-on effect on upward mobility, the report warns, with young people, minorities and immigrants described as "the primary victims."

For a property to be regarded as affordable, the Chapman Center for Demographics and Policy says the median multiple needs to be under 3.

But not a single one of the markets scrutinized in the U.S, U.K, Singapore, New Zealand, Ireland, Hong Kong, Canada or Australia met this criteria.

Worse still, just 15 of the 94 locations included in the research even made the cut as "moderately unaffordable."

Internationally, the least affordable market in the English-speaking world as of last year was Hong Kong, where median house prices are 16.7 times higher than median incomes.

Sydney was second at 13.3 and Vancouver at 12.3, leaving San Jose fourth in those rankings.

High property prices also explain why the U.S. lags behind international counterparts in terms of homeownership, at 66%. Percentages are higher in Canada, Ireland and Singapore.

"The housing crisis demands prioritizing the well-being of people over abstract planning ideals," the Demographia report adds. "The planning orthodoxy, while aimed at improving cities, has worsened affordability."