A new housing analysis found home prices rose substantially faster than household incomes across all 50 states from 2015 to 2024, producing an average 42.67% affordability gap despite nearly half a trillion dollars in federal housing spending.
By yourNEWS Media Newsroom
Home prices have outpaced household income growth in every state over the past decade, widening the divide between earnings and the cost of buying a home and placing homeownership increasingly beyond the reach of many Americans, according to a new analysis of federal housing data.
A report from government-spending watchdog OpenTheBooks.com examined U.S. Census Bureau and Federal Housing Finance Agency data from 2015 through 2024 and calculated what it calls an “affordability gap” — the difference between the change in home prices and the change in household income.
Extreme Makeover Final by yourNEWS Media
Across all 50 states, that gap averaged 42.67%.
The findings also showed little indication that a state’s political alignment determined whether residents experienced worsening affordability. Some of the largest gaps appeared in traditionally Republican states, others in Democratic states, and several in politically competitive states.
“Americans are rightly focused on affordability issues on the heels of years of historic inflation and new pressure on energy prices. Those macroeconomic factors have put homebuying out of reach for many Americans,” a spokesperson for OpenTheBooks.com told the Daily Caller News Foundation.
Housing pressures were even more pronounced across the seven battleground states from the 2024 presidential election, where the average affordability gap reached 54.77%.
Pennsylvania was a notable exception among those states, recording a gap of 34.79%.
The widest affordability gap in the country was recorded in Idaho at 83.33%, followed by Florida at 77.19%.
Utah registered a 69.06% gap, Tennessee 66.15%, Arizona 65.47%, New Hampshire 65.36%, Nevada 65.25%, Maine 62.26%, Rhode Island 61.73% and Washington 60.51%.
At the other end of the spectrum, Louisiana recorded a 6.62% gap, followed by West Virginia at 9.93%, North Dakota at 13.15%, Mississippi at 16.11% and Alaska at 18.75%.
Illinois registered 20.51%, Maryland 23.48%, Iowa 25.89%, California 27.22%, Hawaii 29.16% and Delaware 29.46%.
Even in states with comparatively smaller gaps, however, the analysis found home prices still increased faster than household earnings during the 10-year period.
The report also examined whether higher levels of spending by the U.S. Department of Housing and Urban Development corresponded with smaller affordability gaps.
According to OpenTheBooks.com, the analysis found no meaningful state-by-state relationship between HUD spending and the widening disparity between housing prices and incomes.
“Looking at the figures, prices have galloped ahead of incomes in every state in the union over the course of a decade,” the spokesperson said. “Nearly a half a trillion dollars was spent trying to make housing more affordable and accessible, but an analysis demonstrates it had no meaningful relationship with the state-by-state affordability gap families are now facing.”
Some states received particularly high levels of HUD spending on a per-capita basis.
Massachusetts, for example, reached as much as $3,940 per capita, while numerous states received more than $1,000 or $2,000 per person.
The watchdog group argued that the results raise questions about whether large federal expenditures are effectively addressing the underlying causes of housing affordability.
“What seems clear is this kind of massive top-down spending not only exacerbates inflationary pressures, it’s not demonstrably efficient or effective. It doesn’t seem to helping Americans close that gap between growing prices and incomes,” the spokesperson said.
OpenTheBooks.com said other variables must also be considered when examining why housing costs have risen so much more quickly than incomes.
The spokesperson pointed to local government spending, regulation and “more sensible federal budgeting” as factors deserving consideration.
“Shoveling money at the problem from far-away Washington does not hold a lot of hope … The further from the construction site, the less effective these decisions and investments are likely to be,” he continued.
The report also identified the COVID-19 pandemic and the migration patterns it produced as another possible factor behind particularly severe price increases in some states.
The abrupt shift toward remote work allowed many people to leave large metropolitan areas and relocate to lower-cost or less densely populated parts of the country, creating additional housing demand in some destinations.
“In a handful of states with, it’s also true that they experience an influx of folks who were leaving big cities during the Covid crisis,” the spokesperson said. “Idaho is a good example where home prices skyrocketed and people leaving states like California likely impacted that. But Idaho was also number one in the nation for income growth over that decade, which suggests that where people are moving, growth and opportunity are likely to follow in the future.”
Idaho nevertheless finished with the largest affordability gap in the country at 83.33%, illustrating how rapidly its home prices increased even alongside strong income growth.
Beyond the relationship between prices and earnings, OpenTheBooks.com examined another challenge confronting prospective homeowners: accumulating enough money for a down payment.
The group calculated how long a household earning the median income in each state would need to save for a 20% down payment on an average-priced home if it could set aside 10% of its pre-tax income.
Even under that assumption, the required savings period could stretch for years or decades.
“If we presume a 10% pre-tax savings rate, which is by no means easy for every American, it would take more than 9 years to save for a 20% down payment in Alaska. That’s on the short end,” the spokesperson said. “In Maine, you’d be looking at a quarter of a century. After reviewing the numbers, it gets a lot easier to see why younger generations may have concluded the dream is out of reach and even given the American Dream a Gen Z makeover.”
The findings portray a housing affordability problem extending well beyond a handful of expensive metropolitan areas or politically similar states.
From 2015 through 2024, home prices outpaced household income growth throughout the country, while the national affordability gap reached 42.67% and exceeded 60% in numerous states.
The report’s findings also suggest that the challenge cannot be explained by federal housing spending alone. Despite nearly half a trillion dollars devoted to making housing more accessible and affordable, OpenTheBooks.com said its analysis found no meaningful relationship between HUD expenditures and state-level affordability outcomes.
For prospective buyers, the consequences extend beyond higher monthly housing costs. In some states, simply accumulating a traditional down payment could require decades of saving at a rate many households may struggle to maintain.
Original article
Comments