(The Center Square) – The typical American has to save for at least a decade to afford a home in their state, despite the federal government spending nearly half a trillion dollars on housing programs since 2015, a new report reveals.
Open The Books analyzed state-by-state median household income, the federal government's House Price Index, and spending by the U.S. Department of Housing and Urban Development on 18 housing programs over the past decade. Open The Books is an organization that tracks government spending.
It found that the median home price outpaced median household wages in all 50 states from 2015 to 2024.
In all but two states, there was a double-digit difference between the growth rate of income versus home prices, which Open The Books calls the “affordability gap.”
Notably, the report, "Extreme Makeover: American Dream Edition?," found broad geographic and political diversity among states with the most severe affordability gaps. The report was released Monday night.
Idaho has the highest affordability gap, its score of 83.3 reflecting the median home price growing by 151% as median incomes rose only 68% from 2015 to 2024.
Florida follows behind with a 77.2 affordability gap, trailed by Utah, Tennessee, Arizona, New Hampshire, Nevada, Maine, Rhode Island and Washington.
The 10 states with the lowest affordability gaps are equally diverse. Louisiana has the lowest affordability gap, 6.6, with home prices rising 40% and income rising 33.4% over the decade studied.
West Virginia has the second lowest affordability gap, followed by North Dakota, Mississippi, Alaska, Illinois, Maryland, Iowa, California and Hawaii.
Besides comparing home price and wage growth, Open The Books also calculated what fraction of a household income is needed for the typical state resident to afford a 20% down payment on a typically-priced home.
In every state but Alaska, the cost of a 20% down payment on a typical home exceeds 100% of the typical household’s pre-tax annual income.
That means it will take the median U.S. earner who saves 10% of their pre-tax annual income at least nine and a half years to achieve home ownership in any state.
In some states, the wait time is more than two decades.
A Maine resident making the state median income and saving 10% pre-tax each year has to wait 25 years before they can afford a 20% down payment on a home.
The median home cost in Maine is over $962,000, and the median salary is less than $77,000, meaning a down payment costs 251% of the typical resident’s pre-tax median income.
New York, Massachusetts, Rhode Island, Florida, Montana, Idaho, Vermont, Washington, Oregon, California and Tennessee all have down payment costs between 246% and 185% of pre-tax median income levels.
By contrast, Alaska has the most attainable down payments, followed by West Virginia, Oklahoma, Iowa, Kansas, Louisiana, Illinois, North Dakota, Wyoming, Texas, Ohio, and Minnesota. Even in those states, however, the price of a down payment on a home ranges from 95.8% to 132% of pre-tax annual income.
Christopher Neefus, vice president of communications at Open The Books, said the findings speak to a “generational tension” between younger generations and the Boomer generation, where home ownership was considered a key part of “the American dream.”
“A down payment on a home is so far off in the distance for some folks, it makes sense to reconsider what the American dream looks like,” Neefus told The Center Square. “And in the meantime, the government is throwing a ton of cash at the situation, and as we've seen time and again, this top-down spending is not really moving the needle the way that it needs to for folks.”
Between 2015 and 2024, HUD spent more than $460 billion on 18 housing affordability programs.
Yet when Open The Books broke down that spending for each state on a per-capita basis, researchers found that those taxpayer dollars reduced the affordability gap over that decade by a statistically insignificant 2.75%.
“It speaks to the inefficiency of some of these programs. When you spend from the top down, it's very difficult for dollars to end up where they're needed the most,” Neefus said. “And then you have a problem similar to what we've seen in higher education, which is to have all of this government investment to help people afford higher education, but ultimately it doesn't control cost.”
Real reform, Neefus argued, needs to happen at the state level.
“When dollars are spent on a more local level, where people understand the terrain and the needs of the community, that’s always going to be better than a giant lump sum from the federal government,” he said.
“These are big-picture factors that go beyond any narrow fix. But what’s been proven over the decades is [that] more local decisions tend to lead to better outcomes. Letting laboratories of democracy compete and identify solutions is likely better than a single decisionmaking body at the federal level.”
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