As housing prices have skyrocketed across the country, young Americans have felt the dream of homeownership quickly slipping away. But as Millenials and Gen Zers have voiced their frustrations, older Americans have fired back, suggesting that buying a home years ago was just as expensive. This exchange has sparked a generational clash, igniting tensions and passionate discussions between both sides.
To settle the debate, we decided to delve into the data to figure out whether housing is actually more expensive for younger Americans today. To do this, we pulled statistics from the most recent 2022 U.S. Census and compared those to the same numbers from the 1970 Census, when Baby Boomers were beginning to purchase starter homes. We also compared these to our own RealtyHop data taken from over 4 million properties for sale in 2023 to paint a more recent picture. Read on to see the results.
Key Findings
- Housing across America is far less affordable now compared to when previous generations purchased their first home, even when adjusting for household income.
- Every state in the U.S. saw its housing multiple (how many years of income it would take to purchase a home) increase since 1970.
- Hawaii had the largest housing multiple at 6.85, which is 125% higher than in 1970.
- California had the largest percentage increase in housing multiple since 1970. That state saw its housing multiple rise from 2.15 in 1970 to 6.28 in 2022, meaning that it is almost three times more expensive to buy a home now, even after adjusting for income changes.
A Generational Wealth Gap Has Formed
Is housing more expensive for young people today, even after factoring in wage growth? To answer our question, we compared two main statistics from the U.S. Census:
- Median Household Income: income over the past 12 months for those 15 years or older in the same household.
- Median Value of Owner-Occupied Housing Units: each homeowner’s estimate of how much their property would sell for if it were on the market.
From these statistics, we could then calculate a “housing multiple” for each state:
- Housing Multiple: how many multiples of household income it would take to purchase a home. For example, if median household income is $100K, and the median housing price is $300K, the housing multiple would be 3.
Comparing “housing multiples” for both 1970 and 2022 provided an abundantly clear answer: housing is far less affordable now than when previous generations purchased their first home, even when adjusting for incomes.
Looking at the United States as a whole, the housing multiple rose from 1.77 in 1970 ($9,586 median household income, $17,000 owner median value) to 3.04 in 2022 ($92,646 median household income, $281,900 owner median value), a 72% increase. In fact, every state in the U.S. saw an increase, ranging from Mississippi at 21% all the way to California at 192%.
Housing Multiples by State
The map below breaks down our findings by state. The darker the shade, the larger the difference between the 1970 housing multiple and 2022 housing multiple.
States With the Largest Changes Between 1970 and 2022
While housing nationwide has become significantly more expensive, certain states were more affected. California saw its housing multiple rise from 2.15 in 1970 to 6.28 in 2022, meaning that it is almost three times more expensive to buy a home now. Not far behind was Oregon at an 184% jump and Washington state at 146%.
- California: +192%
- Oregon: +184%
- Washington: +146%
- Colorado: +137%
- Idaho: +136%
- Utah: +127%
- Hawaii: +125%
- Washington DC: +123%
- Montana: +121%
- Arizona +109%
States With the Smallest Housing Multiples in 2022
In Iowa, current home prices are only about 2x median household income, though that is still up from 1.54x in 1970. West Virginia is close behind at 2.03x versus 1.52x in 1970.
- Iowa: 2.00
- West Virginia: 2.03
- Kansas: 2.11
- Ohio: 2.12
- Indiana: 2.17
- Oklahoma: 2.21
- Nebraska: 2.22
- Mississippi: 2.23
- Arkansas: 2.27
- Michigan: 2.31
States With the Largest Housing Multiples in 2022
Hawaii saw the largest housing multiple in 2022 at 6.85, meaning it would take 7x the annual household income to purchase a median home in the state. California was second at 6.28, followed by Washington D.C. at 4.95.
- Hawaii: 6.85
- California: 6.28
- Washington DC: 4.95
- Oregon: 4.49
- Washington: 4.37
- Nevada: 4.37
- Colorado: 4.29
- Utah: 4.08
- Idaho: 3.96
- Massachusetts: 3.95
How 2023 Affected Housing Affordability
While Census data has yet to be released for 2023, we thought it was important to include an analysis with updated prices, given the dramatic rise in home prices last year. Using RealtyHop’s data from over 4 million for-sale listings over the past 12 months, as well as adjusted median family incomes, we saw a similarly dire situation.
Hawaii currently has the most unaffordable housing in the country, with a housing multiple of 6.55, followed by California at 6.27 and Montana at 5.73. These statistics lend more backing to the current housing crisis in these areas. Even North Dakota, the state with the lowest housing multiple, still saw housing costs over 2.5x the median annual household income.
Methodology
To determine the housing affordability gap between generations in America, the RealtyHop team extensively reviewed the 1970 and 2022 U.S. Census reports and calculated the housing multiple using the following data points:
- 1970 Median Owner Home Value by State
- 1970 Median Families Income by State
- 2022 Median Owner Home Value by State
- 2022 Median Families Income by State
While median household income is often the most widely adopted measure when conducting analysis around income levels, we utilized the median families income data, as the 1970 median household income data was not released at a state level. Using median families income would ensure that we compare the income levels fairly. It’s worth noting that family households are still the majority of households in the U.S. About two-thirds of all U.S. households in 2020 were family households, the same share as a decade earlier; married-couple households accounted for about 71% of these households.
Since the Census has yet to release the 2023 ACS data, the 2023 housing multiples were further calculated using projected income based on income growth in the past year released by the BEA. The median list price by state is calculated based on over 4.4 million for-sale listings on RealtyHop between January 1 and December 31, 2023.
For more information on our methodology or to contact our data team, please email [email protected]. You can also check out our Metro Generational Wealth Gap for a more detailed coverage on how housing affordability has exacerbated in 50 of the largest metros in the U.S.
