Owning a home has long been a cornerstone of the American Dream. However, this dream remains out of reach for many Americans. According to the U.S. Census Bureau, only 64.6 percent of Americans owned a home in 2019. That’s 4.3 percentage points below the peak in 2005. While homeownership rates in the U.S. have picked up in recent years, homeownership has not recovered from its pre-recession levels, and growing concerns around COVID-19’s impact on the economy suggest those levels won’t be retaken any time soon.
For the past few decades, home price growth has far exceeded wage growth, making it especially challenging for first-time buyers to afford a home. In 2018, the median household income was $63,179, representing a 168 percent increase since 1985. By contrast, in 2018 the median sales price for a home was $325,275, a 286 percent increase over the same time period. Further, the gap between home price growth and wage growth has accelerated significantly since 2010.
When factoring in affordability, cost of living, employment opportunities, and forecasted home value growth, the toughest locations for young buyers are on the West Coast and in the Northeast. States such as California, Hawaii, and Massachusetts tend to have high living costs and home prices that far exceed any income premium that these states offer. On the other hand, areas in the Midwest and South, like Oklahoma and Ohio, offer more affordable opportunities for new families.
To identify the toughest states for first-time home buyers, researchers at Construction Coverage, a review site for construction and commercial insurance, analyzed data from Zillow and the U.S. Census Bureau. They created a ranking based on factors such as home affordability (median millennial earnings as a share of home prices), unemployment among millennials, cost of living, and projected home value growth.
Based on this analysis, Oregon ranks 3rd toughest for first-time home buyers among all U.S. states. Here is a summary of the data for Oregon:
- Overall score: 59.19
- Median home price: $366,552
- Median earnings for full-time millennial workers: $38,000
- Estimated monthly mortgage payment: $1,468
- Forecasted 1-year change in home price: 3.8%
- Unemployment among millennials: 5.0%
- Cost of living (compared to national average): -0.5%
For reference, here are the statistics for the entire United States:
- Overall score: N/A
- Median home price: $245,193
- Median earnings for full-time millennial workers: $40,000
- Estimated monthly mortgage payment: $982
- Forecasted 1-year change in home price: 4.1%
- Unemployment among millennials: 5.3%
- Cost of living (compared to national average): N/A
For more information, a detailed methodology, and complete results for all states, you can find the original report on Construction Coverage’s website: https://constructioncoverage.com/research/toughest-cities-first-time-home-buyers