Chart of the Day: Twin Cities Housing Affordability on a Global Scale

Here’s a dumb chart from a Richard Florida article to start your day off right. It shows a global (!) list of cities according to “median multiple” income in those cities. The list is diverse and covers much of the Global North.

Here you go:

Here’s Florida’s point from his article, titled “The Global Housing Crisis“:

Several factors appear to be driving the housing affordability crisis of the advanced world. Expensive cities have simply not built enough homes to keep up with growth in employment or population. There are many well-known reasons for this, including NIMBYism, restrictive land-use polices, and the constraints of geography. And, of course, we have seen a sweeping urban revival and the rise of winner-take-all urbanism, in which talent, technology, and other economic assets are densely packed into a small number of neighborhoods.

The problem is, of course, that for some reason the chart splits the cities into two categories: “more restrictive” and “less restrictive” according to “generally liberal” and “land use regulation.”

The Twin Cities is in the former camp because it’s a “blue state” or has the Met Council or something, I guess, whereas St. Louis, Detroit, Charlotte are in the latter camp. Meanwhile a huge number of cities in countries like China (e.g. Hong Kong) and Singapore (!) are listed here and marked in red alongside Minneapolis. Meanwhile, Las Vegas is red too?

The chart implies that the Twin Cities has more in common with Singapore than Cleveland, which is just plain silly. This is the kind of chart that makes people less informed.

 

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2 Responses to Chart of the Day: Twin Cities Housing Affordability on a Global Scale

  1. karen April 11, 2018 at 9:57 am #

    I’m missing how Hong Kong is politically restrictive to development- they build tall and small and dense wherever they can and still have issues – so that seems a demand issue, stemming from political boundaries, not development restrictions – am I missing something? And is Singapore somehow way less restrictive than Hong Kong – and yet way more affordable?

    And yeah, does MSP have way more restrictions on new home developers or building apartments than say Cleveland or St. Louis or Charlotte?

    The bars or somewhat interesting but the red and green colors – practically useless.

    I do find it interesting that Houston – the supply queen of the America with absolutely no zoning is less affordable by this median multiple than Osaka, Mpls, Columbus, Cinncinati, Pittsburgh etc.. and very similar in affordability to Philly and Chicago.

    Of course, the median multiplier is a questionable metric. Just a simple thing here, but as interest rates go down, list price of houses go up but monthly cost including mortgage may actually be less because of lower interest rates. Financing cost also impact developers and landlords that rent.

    Why not just rents versus median incomes – why only ownership?

    To me, for anything to be serious about sussing out differences in affordability in shelter should factor at least these things: average sf of shelter per person, differing age demographics (like only compare affordability compared to working age (24-54?) incomes in each city), time and purchase cost of transportation to work, schools etc, cost of taxes to support infrastructure in city (is infrastructure value, efficient to residents -c ost of roads, transit subsidies etc)

    Dallas may appear less affordable than Pittsburgh, but people may on average buy far larger houses and yards in Dallas – so really – you can get more sf of shelter in Dallas for less than Pittsburgh.

    Houston may seem slightly more affordable than Chicago but transportation in Houston may cost each resident, on average, far more than in Chicago where many can do fine without a car.

    A towns housing may look expensive compared to its income because the town is very young (young people tend to make less money than older people).

    I could go on…

    and on…this is why we have serious scientists, economists who do real studies that people pick apart until they satisfy most critics…instead of policy via meme.

  2. karen April 11, 2018 at 10:28 am #

    Another thing that I think is sorely lacking in looking at affordability of cities is income/wealth brackets.

    One of main reason SF is expensive is there are a ton of people living and working there that make huge, enormous amounts of money – I mean crazy average salaries and anyone into real estate in the town also benefits from this wealth

    But meanwhile anyone not already owning a home, and working regular jobs, teachers, firefighters, retail workers, nurses etc, don’t make that much more than other places.

    So high cost of home ownership rents on AVERAGE make sense compared to high income wealth (why Switzerland is more expensive than Mexico), those AVERAGES may not expose real way worse affordability issues at for different types of workers.

    What is clear to me is that in top most expensive areas in U.S., there are a lot of educated two income families that are doing very well and not loving high cost of homeownership can afford it and it has become huge source of wealth to anyone in that game for a while – so things are pretty darn good for lots of Americans in these expensive cities….then meanwhile, for renters and younger people in working class or other professional jobs that have not increased in wages as much as others – in those expensive cities – things are much worse for that group of people decades ago.

    So I really think we should look at how affordable cities are to those who are, say 30 years old, and make, say, in the bottom 40 percentile of income and who don’t have generational wealth – how much does rent cost them – how likely is it they could buy a condo or house. To me – how they are doing is most important metric in terms of affordability policy rather than averages.

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