Extent of the U.S. Housing Crisis Revealed
A recent report sheds light on the U.S. housing crisis, revealing some concerning trends.
According to a study by OpenTheBooks.com, a government spending watchdog, the spending from the U.S. Department of Housing and Urban Development (HUD) hasn’t succeeded in lowering home prices. The analysis, which examined data from the U.S. Census Bureau and the Federal Housing Finance Agency spanning from 2015 to 2024, indicates that homeownership is becoming increasingly difficult to achieve across nearly every state, regardless of political affiliation.
A spokesperson for OpenTheBooks.com shared, “Americans are rightly focused on affordability issues following years of historic inflation and rising energy costs. These macroeconomic factors have pushed homebuying out of reach for many.”
The report characterizes the difference between changes in house prices and household income as the “affordability gap.”
Across all 50 states, the average affordability gap was 42.67%. In the seven battleground states for the 2024 Presidential Election, this figure jumped to an average of 54.77%, with Pennsylvania standing out at 34.79%.
Interestingly, the data suggests that housing affordability is not influenced by whether a state leans “red” or “blue.”
The states with the widest affordability gaps included: Idaho (83.33%), Florida (77.19%), Utah (69.06%), Tennessee (66.15%), Arizona (65.47%), New Hampshire (65.36%), Nevada (65.25%), Maine (62.26%), Rhode Island (61.73%), and Washington (60.51%).
Conversely, the states with the narrowest gaps were: Louisiana (6.62%), West Virginia (9.93%), North Dakota (13.15%), Mississippi (16.11%), Alaska (18.75%), Illinois (20.51%), Maryland (23.48%), Iowa (25.89%), California (27.22%), Hawaii (29.16%), and Delaware (29.46%).
The HUD did not provide any comments when contacted.
According to the report, HUD spending has also not significantly impacted affordability.
“Looking at the figures, prices have outpaced incomes consistently across the nation over the last decade,” the spokesperson noted. “Despite nearly half a trillion dollars spent attempting to improve housing affordability, our analysis shows no significant link to the affordability gap many families are encountering.”
States that saw high levels of HUD spending on a per capita basis, like Massachusetts, reported figures as high as $3,940. Many others exceeded $1,000 or even $2,000 per capita.
“It’s evident that large-scale spending from the top not only increases inflationary pressures but also fails to yield effective results. It doesn’t seem to be helping Americans bridge the gap between rising prices and stagnant incomes,” they added.
The spokesperson also pointed out that “various other factors need consideration,” such as local spending, regulations, and wiser federal budgeting.
“Throwing money at the problem from afar doesn’t inspire much optimism… The further away from the construction site, the less effective these decisions and investments are likely to be,” they said.
Another aspect that may have affected housing affordability is the COVID-19 pandemic.
“In some states, there was an influx of people leaving major cities during the pandemic,” the spokesperson explained. “Idaho, for example, saw home prices soar as individuals departed from places like California. Interestingly, Idaho also ranked highest in the nation for income growth over the decade, suggesting that growth and opportunities tend to follow where people relocate.”
The spokesperson highlighted an even more “staggering” insight: the time it takes for a median-income household to save for a down payment on an average home in their state.
“Assuming a 10% pre-tax savings rate, which isn’t easy for everyone, it would take over nine years to accumulate a 20% down payment in Alaska—that’s on the shorter end. In Maine, the timeline extends to about 25 years. It’s easy to understand why younger generations might feel the American Dream is becoming increasingly elusive,” they concluded.
