Key points:
- Home prices have far outpaced wage growth, making homeownership unattainable for many—even those with full-time, professional jobs—due to a systemic failure in housing policy, not personal financial mismanagement.
- This is a housing affordability crisis, not an income crisis; the cost of buying a median-priced home in Davis requires an income far beyond what most local workers earn, illustrating a structural mismatch between housing supply and economic opportunity.
- Relocating to cheaper areas is not a real solution, as affordable housing is often located far from jobs, services, and opportunity—exposing the need for more housing near employment centers, along with zoning and policy reforms to enable it.
As referenced yesterday, “If you want a measure of how the American economy is doing, here’s a deceptively simple one: Can a 30-year-old with a full-time job afford a home?”
That question cuts through the noise, capturing not just an economic reality, but a generational and structural crisis too many still fail to fully grasp.
The truth is, the answer today is increasingly “no”—and not just for the most vulnerable or financially precarious. It’s “no” for college-educated professionals. It’s “no” for dual-income families. And it’s especially “no” in thriving job centers and metro areas, from Los Angeles and San Francisco to Seattle, Austin, and Boston.
Some still argue this is nothing new, that homeownership has always required sacrifice, long commutes, dual incomes, or personal trade-offs. But this perspective—while grounded in personal anecdotes from decades past—misses the scale and systemic nature of what’s happening now.
Today’s housing crisis is not the continuation of a long-standing trend; it is the result of decades of policy failure, disinvestment, exclusionary zoning, and stagnating wages, all converging into a massive and urgent problem.
First, let’s address the economic shift in housing affordability.
In 1970, the median home price in the U.S. was about $23,000. Adjusted for inflation, that’s roughly $180,000 in today’s dollars. The actual median home price today? Over $420,000. That’s not just a bump—that’s more than double the inflation-adjusted price. That doesn’t even begin to address higher cost housing markets like Davis, the Bay Area, Los Angeles and other major cities.
In Davis, the median home price now hovers around $900,000, according to recent Zillow data. To afford that without exceeding the recommended 30 percent of gross income on housing, a household would need to earn over $220,000 per year. That’s more than double the median household income in Davis, which is approximately $90,000, and far beyond the reach of most university employees, young professionals, or essential workers.
Even with two solid incomes, most families are effectively priced out of homeownership in the very community where they work—highlighting a growing disconnect between housing costs and local wages.
The disconnect between wages and home prices in Davis (and other areas) makes it clear that this is not simply an income issue—it’s a housing affordability crisis. Even well-educated, full-time professionals with stable dual incomes cannot reasonably afford to buy a home here.
When the cost of a modest house requires more than $200,000 in annual income, but local jobs—whether in education, healthcare, or public service—pay half that or less, the problem is structural, not individual.
It’s not that people aren’t earning enough; it’s that the supply of housing has failed to keep pace with demand, pushing prices far beyond what the local economy can sustain.
That is not to say that income is not also a problem—it’s just not THE problem.
Indeed, as we have noted, wages have barely budged.
According to the Pew Research Center, the average hourly wage (in constant dollars) has only modestly increased since 1970. A typical full-time worker simply hasn’t kept up. In fact, in most metro areas, home prices have grown at three to five times the rate of wage growth over the last two generations.
What this means is that even with a full-time job—or two—young people today are locked out of homeownership in a way previous generations simply were not. It’s not because they aren’t working hard. It’s not because they expect handouts. It’s because the basic math no longer works.
The implications of this are far-reaching. Homeownership has long been the primary vehicle for wealth-building in America. When young people are shut out of the housing market, they aren’t just paying more in rent—they’re losing out on decades of equity, tax benefits, and generational wealth-building.
According to a 2022 report from the Urban Institute, the average homeowner had a net worth over 40 times higher than the average renter. That gap is growing, not shrinking.
This means that housing is a huge driver of income inequality and the wealth gap.
Renting isn’t the easy alternative, either. Rents have surged nationwide, with many cities seeing double-digit increases over the past five years. And unlike mortgages, rent payments do not build equity or financial stability. In high-cost areas, renters are paying well over 30%, sometimes 50%, of their income just to keep a roof over their heads—leaving little room for savings, retirement, or emergencies.
So when people shrug and say, “Just move to where housing is cheaper,” they miss another critical piece of the puzzle: jobs, opportunity, and economic geography.
As Alan Mallach documents in The Divided City, there are indeed parts of America where housing is cheap—but those places have been hollowed out by deindustrialization, disinvestment, and population loss. The jobs aren’t there. The schools aren’t strong. The health outcomes are poor. And the economic future is bleak.
The housing crisis is not simply about affordability in a vacuum—it’s about the mismatch between where people can afford to live and where the jobs are. We have built a system in which economic opportunity is spatially concentrated, but housing access is restricted, especially in high-opportunity urban areas.
Zoning laws, NIMBY opposition, environmental red tape, and political paralysis have created a bottleneck that stifles new housing construction, particularly in the neighborhoods where people most want and need to live. A 2023 analysis from the Brookings Institution found that 75% of residential land in many metro areas is zoned exclusively for single-family homes—blocking multifamily, transit-oriented, or affordable housing from being built.
This isn’t just a technical or market problem—it’s a moral and civic one. We have designed a system that protects incumbent homeowners, hoards opportunity, and then blames younger generations for failing to “adjust.”
And that word—“adjust”—deserves some scrutiny. In theory, people can always adjust. But in practice, what does that mean? Should they abandon job centers, family support networks, and professional opportunities to live in a cheaper but disconnected town? Should they delay family formation, rely on roommates into their 40s, or continue pouring money into rent with no hope of a return? Should they accept that the American dream of homeownership is no longer available to them, even if they do everything “right”?
Adjustment, in this context, is often code for resignation—resignation to a rigged system and a hollowed-out middle class. It’s a way of turning systemic failure into personal responsibility, which is both inaccurate and unfair.
If we want to reverse this trend, we need to get serious about building housing—at scale, near jobs, and for all income levels. That means zoning reform. It means streamlining permitting. It means investing in public infrastructure and transit. And it means challenging the political stranglehold of homeowners who’ve benefited from decades of exclusionary policy.
It also requires a shift in mindset. We must stop treating the current generation’s struggles as a personal failing or a natural phase of life. It is neither. It is a deliberate outcome of choices we have made as a society—and we can choose differently.
Young people today are not asking for mansions or handouts. They are asking for a fair shot at the same dream their parents and grandparents were able to pursue: work hard, live near your job, build a life, and one day own a home. That shouldn’t be too much to ask.
But unless we act—boldly and systemically—that dream will continue to slip further out of reach. Not because the next generation failed to adjust, but because we failed to change.
David, if you compare two investments made in 1970 to one another (1) purchasing a house for $75,000 vs. (2) purchasing an annuity for $75,000. What would their respective values be today. The annuity would be worth $1,100,000. What would the house be worth?
Matt
An annuity only returns more money–it doesn’t return a stream of additional services such as shelter, access to jobs that enable higher returns on investment in human capital, and enjoyment of the community in which one resides. In addition, you still needed to rent in 1970 so at least a part of that annuity needs to go towards that baseline payment.
From article: “As referenced yesterday, “If you want a measure of how the American economy is doing, here’s a deceptively simple one: Can a 30-year-old with a full-time job afford a home?”
“That question cuts through the noise, capturing not just an economic reality, but a generational and structural crisis too many still fail to fully grasp. The truth is, the answer today is increasingly “no”—and not just for the most vulnerable or financially precarious. It’s “no” for college-educated professionals. It’s “no” for dual-income families. And it’s especially “no” in thriving job centers and metro areas, from Los Angeles and San Francisco to Seattle, Austin, and Boston.”
And it was “no” for me when I was 30 (as I noted yesterday regarding this same thing), despite being part of the hated boomer generation. But you know what I didn’t do? I didn’t complain about it – I adjusted (by moving out of my expensive home town), and waited.
By the way, there was a Chronicle article just yesterday which stated that a much higher percentage of San Francisco residents (1 in 5) can afford to buy a home based upon income than they could ten years ago (when it was 1 in 10).
https://www.sfchronicle.com/realestate/article/home-house-price-san-francisco-20774496.php
In any case, which “regulations” do you propose doing-away with, and how much will housing prices drop as a result?
From article: “So when people shrug and say, “Just move to where housing is cheaper,” they miss another critical piece of the puzzle: jobs, opportunity, and economic geography.”
And yet, a significant portion of Davis residents did so for EXACTLY THAT REASON – it was, and still is, much cheaper than the Bay Area, for example. (See “me”, for example.)
From article: “As Alan Mallach documents in The Divided City, there are indeed parts of America where housing is cheap—but those places have been hollowed out by deindustrialization, disinvestment, and population loss. The jobs aren’t there. The schools aren’t strong. The health outcomes are poor. And the economic future is bleak.”
Places with REALLY cheap housing (e.g., under $100K for a decent house) might meet that description. Of course, things change over time – sometimes for the better. But the FAR-MORE IMPORTANT point is that there are places where housing is a BETTER DEAL compared to wages. These aren’t the same places that Mallach is likely referring to. These are places where JOBS have been increasingly moving-to (and created), as well. Places like Nashville, Austin, Charlottsville, etc.
Some of these places are now experiencing an enormous DOWNTURN in housing prices. These are the places where opportunity exists right now.
I’m not sure why some people think that housing prices “should” stay the same in the face of rising overall inflation. In any case, housing prices can, and do go down at times. It’s happening RIGHT NOW – including in Davis, and is NOT RELATED to additional construction, zoning, regulations, or anything other than the cyclical nature of the housing market (and other factors such as interest rates).
Ron O
I’ll post these two articles again for you that support David’s thesis. This housing crisis is not just about Davis or even California. It is now nationwide, and it is increasing the economic divide that is driving much of our current political discord. Selfishly declaring “I have mine” will not solve this problem–it only exacerbates it and even threatens the continuing existence of our democracy.
https://www.theatlantic.com/magazine/archive/2025/03/american-geographic-social-mobility/681439/
https://www.theatlantic.com/economy/archive/2025/06/zoning-sun-belt-housing-shortage/683352/
Perhaps David was a bit optimistic asking if 30 year olds can buy a house and instead it should be 35 year olds. That’s about the age that both my father and I were when we each bought our first house. My middle class neighborhood in Seattle was full of homeowners that age, and similarly Village Homes had a similar composition 30 years ago when interest rates were at least as high as they are today. We’re closing out those households in Davis. As I’ve pointed out repeatedly we damaging both the vibrancy of our community and the environment by having 20,000 residents commute out to high paying jobs elsewhere and 20,000 commuting in to lower-paying jobs here. As pointed out in many studies and articles, including the two from the Atlantic I linked, this mismatch between housing location and jobs is stifling our economic vitality. Younger households face bigger barriers to forming families that we’ll need to create our future from this difficulty of finding nearby jobs and facing long commutes that make raising children burdensome.
As I’ve pointed out before as well is that the average number of people in a house has INCREASED 10% from 2.9 to 3.2 in the 2020 Census vs the 2010 Census. Rising housing prices also reflect rising demand in the face of stagnant supply. This is the single best indicator that we need more housing. That house prices have remained so high despite a doubling of the mortgage rate over the last two years just emphasizes this point. Yes, prices have stopped rising here because of the interest rates, but they have not fallen to the degree that those rate increases imply. An increase in the mortgage rate from 3% to 6.5% reduces the financial value of a house by 33%! Yet Zillow shows that prices are down 0.1% compared to a year ago, and 2.4% from 2 years ago! In other words, effective Davis housing prices have INCREASED 31% over the last 2 years.
We don’t need people to move here from the Bay Area because that market is so expensive–we need people to move here from where they currently live in Vacaville, Woodland or Dixon and commute into Davis, but prices are one-third lower. Even giving those who live in Bakersfield where the unemployment rate is 60% higher a chance to move here is a benefit. But they can’t because we’ve artificially inflated our housing prices.
David has written his best and most bullet-proof article yet on this issue. Some can try to deny its truth, but they are living in a fantasy that doesn’t match the reality the rest of us recognize and live in. I can’t even blame this on Ron living in Woodland because this problem is pervasive across the U.S. We all need to acknowledge what we face and then work on workable solutions that don’t sacrifice the most important community and environmental values that we treasure.
As far as housing prices rising faster than inflation, it appears that interest rates aren’t being fully-accounted for in this equation. Interest rates were much higher in the past, which likely had a dampening effect on housing prices (as they are, now).
I’m not sure what other factors might impact this as well, such as increasing average square footage of new houses, more multi-car garages, modern/extensive electrical systems, improved building codes, more-expensive material and labor costs, etc.
Of course, one cannot get an accurate picture by lumping-in all housing markets into one “number”, in the first place.
In any case, it appears to me that David and others are looking in the “rear-view mirror”, since population is essentially no longer increasing, and housing prices are dropping in most locales – nationwide.
What we’re actually going to see (and are already seeing) is a “silver tsunami”, as the boomers die-off (and young people aren’t having kids at anywhere near replacement levels – nationwide).
This isn’t simply a “theory” – it’s backed by facts/demographics.
So apparently, the average size of a new house in 1970 was 1,500 square feet, while in 2025 it’s around 2,400 square feet. No doubt, with significant differences in appliances, electrical systems, building codes, garage size, etc.
And yet, the average number of people in each household has decreased during that period.
Check out the manner in which this article was written – which I just came across (and compare it to the headline):
Headline: ‘It hurts my heart’: A housing crisis is unfolding in Utah as 27 people were found living crammed into 1 house”
Some text from the article: “In addition to the unsanitary and unsafe conditions, police also found fraudulent identity documents and illegal narcotics. Nineteen people were transported to an ICE detention facility and one person was taken into custody on narcotics charges, reports KUTV.”
Also (from article): “It spoke to a northern Utah woman who said a home in her neighborhood may have more than 20 people living in it. She learned about it from an administrator at her child’s school and contacted the Utah Division of Child and Family Services.”
Uh, huh – Utah – the home of “have as many kids as possible” (and sometimes, as many wives as possible), combined with “harboring illegal immigrants and those engaged in illegal activities”.
And then call it a “housing crisis” (at least, until you actually read what’s in the article).
Me thinks the problem here is not a “housing crisis”.
https://www.msn.com/en-us/money/realestate/it-hurts-my-heart-a-housing-crisis-is-unfolding-in-utah-as-27-people-were-found-living-crammed-into-1-house/ar-AA1IXzfe?ocid=msedgdhp&pc=NMTS&cvid=083511a683594e129ca6995da0b7268d&ei=11