Santa Cruz: 4th least affordable real estate in the world?
Love visiting Santa Cruz and think it might be fun to live there?
You might not be able to afford it. But then again, neither can the people who already live there.
Demographia International of New Zealand’s 2017 International Housing Affordability Survey posits that Santa Cruz County is the least affordable housing market in the world.
The Demographia study uses a figure derived from a calculation the research group calls the “Middle-Income Housing Affordability Median Multiple,” or just “Median Multiple,” which is a specific location’s median house price divided by that same location’s median household income.
“The Median Multiple is widely used for evaluating urban markets,” Demographia explained in the report. “[This measure] has been recommended by the World Bank and the United Nations and is used by the Joint Center for Housing Studies, Harvard University.”
Linda Bailey, Vanguard Realtors
Wildly unaffordable markets are also, says this study, the most sternly regulated. The stricter the building codes, laws, and permit process, the more quickly real estate value has inflated above (and in many cases way beyond) the median income. Historically, less regulated markets “have exhibited median house prices that are three times or less that of median household incomes, for a Median Multiple of 3.0 or less,” the study noted.
California has some of the toughest building regulation in the country (if not the world).
And, correspondingly, in the case of the California cities and counties noted in this study, the Median Multiples figures range from 8.1 to over 11.
The study, which is now in its 13th year, notes this year that Median Multiples in the United States were largely below 3.0 until the 1970s, remaining at that mostly affordable level (with the exception of certain markets) until the early 2000s.
“The most important exception, however, was California, where decades of restrictive land use regulation, including court decisions and far stronger environmental regulation than in the rest of the nation, has been associated with huge housing affordability losses,” Demographia reported.
In November of this year, the Santa Cruz Sentinel newspaper reported that “in the wake of the housing market crash in 2009, the median single-family home price of $380,000 has soared to a record $875,000.
Meanwhile, Santa Cruz’s median income, per census data, was $70,088 in 2016, though reported by Sperling’s to be currently at $61,533. Santa Cruz, the proverbial mellow beach town, hasn’t developed industries that pay salaries to match the new median home prices.
The Sentinel observed that since the 2009 recession, “although the economy rebounded, the industries that provide the most jobs- ag and tourism- tend to be low-paying.”
Santa Cruz is also left-leaning; yet though it is a famously liberal city, it also enforces infamously strident development restrictions. Beyond Chron puts it thus: “The city typically opposes any development regardless of its ability to create working-class jobs, increase affordable housing, or expand racial diversity.”
As demonstrated in the gallery above, data show a dearth in even affordable housing development in the city of Santa Cruz, lagging behind not only other cities, but also behind population growth- and far behind the need for that housing, if the Demographia study is accurate.
An affordability chasm
This chasm between median household incomes and median home prices has grown wide enough that it earns two dubious distinctions. First, Demographia notes that Santa Cruz is the least affordable market in the nation: “With a severely unaffordable Median Multiple of 11.6, Santa Cruz’s housing affordability has deteriorated to a level not before recorded in the United States.
Second, Santa Cruz County is also the the fourth least affordable place in the world. Only Hong Kong, Vancouver and Sydney have registered worse housing affordability.
Among the least affordable markets in the USA, California plays host most often. These stats show the Median Multiple of the hardest-to-afford cities/counties:
Santa Cruz: 11.6
Santa Barbara: 11.3
San Jose: 9.8
Los Angeles 9.3
San Francisco 9.2
San Diego: 8.6
New York, New York: 5.7
Riverside-San Bernardino: 5.6
Portland, Oregon: 5.5 (up from 3.2 in 2000)
Per the same study, the nation’s affordable major housing market is Rochester, NY with a Median Multiple of 2.5, followed by Buffalo at 2.6.
This content was originally published here.