As home prices continue to rise, young people have felt the American dream of homeownership quickly slipping away. However, as millennials and Gen Zers voiced their frustrations, the previous generation pushed back, arguing 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.
In our Generational Wealth Gap series, we answer whether housing is more expensive for younger people today. This is the last report of our three-part series, which focuses on housing affordability in 1970 vs. 2022 in some of the largest cities in the United States.
Our key findings include:
Housing has become 3.73 times more expensive for an average Los Angeles family since 1970.
The top five cities where housing affordability worsened are all located in California – Los Angeles, Oakland, Anaheim, Long Beach, and San Jose. The state as a whole experienced a 192% decrease in housing affordability.
Homes are 3.25 times more unaffordable for average families in Miami. The nearby Hialeah has seen similar trends, with housing being 3.49x more unattainable since 1970.
The booming technology industry contributed to the worsening housing affordability. 14 of the 20 top cities in the report are major cities with tech talent.
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. Read on to see the results.
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 Family Income (in the 1970 Census, the data was labeled as “Median Families Income”)
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 Unaffordability Multiple for each city: how many multiples of family income it would take to purchase a home in 1970 vs. in 2022. Here’s how it’s calculated:Assuming that 1970 Median Families Income = $9,000
1970 Median Value = $15,000
2022 Median Family Income = $90,000
2022 Median Value = $450,000
Housing Unaffordability Multiple = ( 2022 Median Value / 2022 Median Family Income ) / ( 1970 Median Value / 1970 Median Families Income) = ($450,000 / $90,000) / ($15,000 / $9000) = 3
The Housing Unaffordability Multiple provided an abundantly clear answer: housing is far less affordable now than when previous generations purchased their first home.
Housing Unaffordability Multiples by City
The map below breaks down our findings by city. The larger the bubble, the bigger the Housing Unaffordability Multiple.