"The middle class is under siege”: New report links urban livability policies to sky-high home prices

Your city may be more walkable these days, but depending on where you live, that is exactly what makes it unaffordable.

A new report from Chapman University and the Frontier Centre for Public Policy looked at the effects of policies aimed at controlling urban sprawl on housing affordability.

Researchers found that housing prices are rapidly outpacing income growth as more cities engage in “urban containment” policies, such as strict zoning laws, limits on building heights, and restrictions on the development of greenfield sites.

"The middle class is under siege principally due to the escalation of land costs," the report’s authors said. "As land has been rationed in an effort to curb urban sprawl, the excess of demand over supply has driven prices up."

While the eco-conscious road may be paved with good intentions, the report indicates that resulting housing policies have led to land prices being 8 to 20 times higher in urban areas than outside them.

"Restrictive housing policies may be packaged as progressive, but in social terms their impact could be better characterized as regressive,” writes the director of the Center for Demographics and Policy director, Joel Kotkin.

California takes the cake for “impossibly unaffordable”

The report looked at the price-to-income ratios of 94 housing markets across Australia, Canada, China, Ireland, New Zealand, Singapore, the U.K., and the U.S.

A ratio of 3 or less is considered affordable, while higher ratios indicate increasing levels of unaffordability. A ratio of 9 or higher is classified as "impossibly unaffordable."

The United States had five impossibly unaffordable markets, four of which are located in California, including San Jose (11.9), Los Angeles (10.9), San Francisco (9.7) and San Diego (9.5).

"High housing prices, relative to incomes, are having a distinctly feudalizing impact on our home state of California, where the primary victims are young people, minorities, and immigrants," wrote Kotkin.

Meanwhile, Pittsburgh had the best affordability rating of 3.1, with Rochester, St. Louis, and Cleveland close behind.

"The middle class is under siege”

The report highlights that the housing affordability crisis is a major threat to the middle class, as high housing costs lower living standards for the majority of Americans and lead to increased poverty.

“For decades in the high-income world, a hallmark of a strong middle class was the widespread ability to own a home – house prices generally rose in line with household incomes," the authors write.

"As late as the 1990s, house prices were three times or less than household incomes,” writes the authors.” However, this nexus has been broken in many markets.”