Home Prices Are Rising Faster Than Wages: The States Where It's the Worst
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The US housing market is no stranger to volatility, and housing affordability continues to remain a significant concern for aspiring homeowners waiting on the sidelines as home prices rise and mortgage rates increase.
At the core of this concern, however, lies the crucial interplay between housing prices and wages that determines the financial well-being of families and individuals. To better understand this dynamic, we've analyzed data between 2018 and 2022 to examine how, in each state, housing prices have evolved compared to wages.
The results highlight disparities that reflect economic trends, regional influences, and the challenges many Americans face in finding affordable housing.
Understanding the Data
The data presented showcases the percentage increase in housing prices and wages across all 50 US states over a five-year period, from 2018 to 2022. This "Housing vs. Wages Growth Gap" quantifies how much more housing prices have grown compared to wages in each state.
National Outlook
The data for the United States presents a sobering picture, as the nation faces a 15 percentage point gap between housing price and wage growth.
Over the last five years, housing prices have increased by an average of 37.2%, significantly outpacing wage growth of 22.2%.
Between 2018 and 2022, median wages only increased by $12,720. That's while national housing prices increased by a whopping $91,200, an absolute difference of $78,480.
This national trend signifies that, on average, housing affordability is a growing concern, as housing prices are rising much faster than wages. While some states exhibit extreme gaps, such as Idaho, the national outlook points to a pressing need for addressing housing affordability and wage growth at the national level.
Where Are Home Prices Rising Faster Than Wages?
Here are some more of our key findings on where home prices are rising faster than wages.
Western States Lead
Western states, including Idaho, Arizona, and Utah, feature prominently at the top of the list, emphasizing the region's rapid growth and housing demand.
Southern States Follow
Southern states, like Florida, Tennessee, and Georgia, also show substantial gaps, indicating economic vitality among housing affordability challenges.
Diverse Wage Growth
States with both high and low wage growth, such as New Hampshire and Delaware or Louisiana and Alaska, demonstrate that wage increases do not necessarily correlate with housing price growth.
| Rank | Geographic Area Name | Housing Index - 5 year % Increase | Wages - 5 year % Increase | Housing Vs. Wages Growth Gap |
|---|---|---|---|---|
| -- | USA | 37.20% | 22.2% | 15.0% |
| 1 | Idaho | 72.08% | 26.5% | 45.6% |
| 2 | Arizona | 62.56% | 24.8% | 37.7% |
| 3 | Utah | 59.92% | 26.1% | 33.8% |
| 4 | Florida | 56.72% | 27.3% | 29.4% |
| 5 | Tennessee | 50.19% | 23.1% | 27.1% |
| 6 | Nevada | 50.44% | 23.8% | 26.6% |
| 7 | Montana | 51.01% | 25.6% | 25.4% |
| 8 | Georgia | 47.53% | 22.7% | 24.8% |
| 9 | Rhode Island | 43.08% | 20.0% | 23.1% |
| 10 | North Carolina | 47.33% | 24.6% | 22.8% |
| 11 | Texas | 42.59% | 20.5% | 22.0% |
| 12 | Washington | 47.76% | 27.1% | 20.7% |
| 13 | Oklahoma | 35.87% | 15.5% | 20.3% |
| 14 | South Carolina | 43.42% | 24.2% | 19.2% |
| 15 | Maine | 46.89% | 28.1% | 18.8% |
| 16 | New Hampshire | 45.78% | 27.2% | 18.5% |
| 17 | Wyoming | 35.58% | 17.2% | 18.4% |
| 18 | Indiana | 40.24% | 22.0% | 18.3% |
| 19 | Alabama | 38.55% | 20.9% | 17.7% |
| 20 | Missouri | 38.32% | 20.7% | 17.6% |
| 21 | Michigan | 35.94% | 18.7% | 17.2% |
| 22 | New Mexico | 39.47% | 22.4% | 17.1% |
| 23 | Ohio | 37.38% | 20.6% | 16.8% |
| 24 | South Dakota | 39.53% | 23.7% | 15.8% |
| 25 | New Jersey | 35.24% | 19.5% | 15.7% |
| 26 | Colorado | 41.27% | 26.3% | 15.0% |
| 27 | Delaware | 34.29% | 19.4% | 14.9% |
| 28 | Kansas | 35.38% | 20.5% | 14.8% |
| 29 | Kentucky | 35.15% | 20.5% | 14.6% |
| 30 | California | 37.93% | 23.3% | 14.6% |
| 31 | Oregon | 39.53% | 25.0% | 14.5% |
| 32 | Vermont | 38.97% | 25.1% | 13.9% |
| 33 | Wisconsin | 34.82% | 21.1% | 13.7% |
| 34 | Connecticut | 33.56% | 19.9% | 13.6% |
| 35 | Arkansas | 36.14% | 22.9% | 13.2% |
| 36 | Nebraska | 36.65% | 23.8% | 12.8% |
| 37 | Hawaii | 33.13% | 20.6% | 12.5% |
| 38 | Pennsylvania | 33.12% | 20.9% | 12.2% |
| 39 | Virginia | 33.69% | 22.1% | 11.5% |
| 40 | Mississippi | 30.81% | 19.3% | 11.5% |
| 41 | Minnesota | 31.24% | 20.2% | 11.0% |
| 42 | Massachusetts | 34.55% | 23.7% | 10.9% |
| 43 | West Virginia | 24.38% | 15.3% | 9.1% |
| 44 | New York | 31.65% | 22.8% | 8.8% |
| 45 | Maryland | 29.02% | 20.5% | 8.6% |
| 46 | Alaska | 24.91% | 17.3% | 7.6% |
| 47 | Iowa | 27.30% | 20.8% | 6.5% |
| 48 | North Dakota | 19.68% | 15.0% | 4.7% |
| 49 | Louisiana | 22.02% | 17.6% | 4.4% |
| 50 | Illinois | 24.94% | 21.4% | 3.6% |
States With the Largest Housing vs. Wage Growth Gaps
Now, let's take a look at the states where the largest housing and wage growth gaps exist.
#1 – Idaho, a 45.6% Gap
Idaho leads the nation with the most significant housing vs. wage growth gap. Housing prices increased by an astonishing 72.08%, while wages only grew by 26.5%.
#2 – Arizona, a 37.7% Gap
Arizona follows closely behind, with housing prices growing by 62.56%, surpassing its 24.8% wage growth.
#3 – Utah, a 33.8% Gap
Utah ranks third, experiencing a 59.92% increase in housing prices compared to a 26.1% growth in wages.
#4 – Florida, a 29.4% Gap
Florida has seen housing prices rise by 56.72%, while wages increased by 27.3%.
#5 – Tennessee, a 27.1% Gap
Tennessee's housing prices increased by 50.19%, outpacing its 23.1% wage growth.
#6 – Nevada, a 26.6% Gap
Nevada's housing prices surged by 50.44%, while wages grew by 23.8%.
#7 – Montana, a 25.4% Gap
Montana's housing prices increased by 51.01%, with wages growing by 25.6%.
#8 – Georgia, a 24.8% Gap
Georgia exhibits a 47.53% increase in housing prices compared to a 22.7% increase in wages.
#9 – Rhode Island, a 23.1% Gap
Rhode Island's housing prices increased by 43.08%, while wages grew by 20.0%.
#10 – North Carolina, a 22.8% Gap
North Carolina rounds out the top ten, with housing prices growing by 47.33%, outpacing its 24.6% wage growth.
Real Dollar Increases of House Prices Versus Wages
Let's take it a step further and put these percentages into perspective: Observing the real dollar differences in home price and wage increases allows us to more tangibly understand the impact this gap has on housing affordability and wealth-building.
The table below illustrates the extent to which home prices have outpaced wage growth over time in dollar terms.
- National Wage Increase: $12,720;
- Housing Price Increase: $91,200; and
- Housing Prices Outpace Wages by $78,480.
Below is a state-by-state breakdown table, illustrating the disparity between wage growth and housing costs in actual dollars:
| State | Wage Increase | Housing Price Increase | Housing Prices Outpace Wages by |
|---|---|---|---|
| USA | $12,720 | $91,200 | $78,480 |
| Alabama | $9,895 | $53,000 | $43,105 |
| Alaska | $9,648 | $60,800 | $51,152 |
| Arizona | $12,868 | $161,700 | $148,832 |
| Arkansas | $10,084 | $46,700 | $36,616 |
| California | $15,958 | $169,100 | $153,142 |
| Colorado | $15,491 | $157,800 | $142,309 |
| Connecticut | $13,495 | $69,800 | $56,305 |
| Delaware | $11,002 | $81,900 | $70,898 |
| Florida | $13,677 | $123,500 | $109,823 |
| Georgia | $12,150 | $107,500 | $95,350 |
| Hawaii | $10,506 | $188,400 | $177,894 |
| Idaho | $11,354 | $199,400 | $188,046 |
| Illinois | $12,815 | $48,200 | $35,385 |
| Indiana | $10,462 | $61,400 | $50,938 |
| Iowa | $9,866 | $42,600 | $32,734 |
| Kansas | $9,571 | $47,200 | $37,629 |
| Kentucky | $9,500 | $48,200 | $38,700 |
| Louisiana | $8,460 | $41,900 | $33,440 |
| Maine | $12,764 | $93,100 | $80,336 |
| Maryland | $12,516 | $73,300 | $60,784 |
| Massachusetts | $17,194 | $134,000 | $116,806 |
| Michigan | $10,078 | $61,900 | $51,822 |
| Minnesota | $11,717 | $79,200 | $67,483 |
| Mississippi | $7,665 | $39,200 | $31,535 |
| Missouri | $10,171 | $58,600 | $48,429 |
| Montana | $11,107 | $117,200 | $106,093 |
| Nebraska | $11,014 | $70,600 | $59,586 |
| Nevada | $11,929 | $142,500 | $130,571 |
| New Hampshire | $15,467 | $114,700 | $99,233 |
| New Jersey | $12,840 | $84,900 | $72,060 |
| New Mexico | $10,095 | $68,400 | $58,305 |
| New York | $16,652 | $74,900 | $58,248 |
| North Carolina | $12,462 | $100,000 | $87,538 |
| North Dakota | $7,859 | $44,400 | $36,541 |
| Ohio | $10,421 | $53,000 | $42,579 |
| Oklahoma | $7,265 | $51,700 | $44,435 |
| Oregon | $13,259 | $133,800 | $120,541 |
| Pennsylvania | $11,653 | $59,500 | $47,847 |
| Rhode Island | $10,763 | $110,100 | $99,337 |
| South Carolina | $10,822 | $83,800 | $72,978 |
| South Dakota | $10,361 | $73,500 | $63,139 |
| Tennessee | $11,653 | $107,300 | $95,647 |
| Texas | $11,867 | $89,400 | $77,533 |
| Utah | $12,660 | $196,200 | $183,540 |
| Vermont | $11,963 | $71,600 | $59,637 |
| Virginia | $12,895 | $84,000 | $71,105 |
| Washington | $17,891 | $196,400 | $178,509 |
| West Virginia | $7,039 | $33,800 | $26,761 |
| Wisconsin | $10,331 | $64,300 | $53,969 |
| Wyoming | $8,261 | $61,800 | $53,539 |
Notably, in many states, housing prices have seen substantial growth compared to wage increases. For instance, in California, housing prices outpace wages by a staggering $153,142 annually.
Conclusion
The analysis of housing price increases compared to wage growth from 2018 to 2022 reveals a complex economic landscape across the United States. It underscores the pressing issue of housing affordability in numerous states, with significant variations in the gap between housing prices and wage growth.
Disparities in housing affordability persist, and while some states have experienced remarkable growth in both housing prices and wages, others struggle with a widening gap between these two key factors.
The data serves as a reminder that the pursuit of affordable housing remains a critical issue for many Americans. Addressing the housing-wage growth gap is crucial for ensuring that residents can build wealth through homeownership, while maintaining a reasonable standard of living.
Methodology
We calculated the percentage difference over the 5-year period from 2018 to 2022. The resulting "Housing vs. Wages Growth Gap" was obtained by subtracting the percentage increase in wages from the percentage increase in housing prices. States were then ranked based on the magnitude of this gap.
Associated with the data, but not used in the final rank, was the dollar amount increase of wages and median housing costs over the same time period.
Housing Price data was collected from the Federal Housing Finance Agency's Annual House Price Indexes, while data for wage growth was collected from the Bureau of Labor Statistics. Median House Price data was collected from the Census Bureau American Communities Survey.
To calculate percentage increases in home prices, we chose to use the housing price index, rather than surveyed median home values, which were self-reported and can be influenced by market shifts. Conversely, house price index employs advanced statistical methods to provide a more reliable measure of price appreciation by considering factors like home type and characteristics. While we use median home price data for real dollar increases, we use the index for percentage changes. This will yield slightly different results than calculating home price change percentage using median values.
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