What you need to know
- In recent years, media attention has focused on sharply rising home prices in major cities
- Less attention has been paid to home prices in other parts of the country
- This brief highlights differences in housing affordability between urban, suburban, and rural communities throughout the U.S.
Housing affordability has been at the forefront of national discussions, as average home prices have risen significantly across the U.S. in recent years. Many stories have highlighted sharp price increases in large cities such as New York, Los Angeles, and San Francisco. However, less data is readily available to determine whether prices have increased nationwide or only in some areas. It is also unclear to what degree, if any, incomes have kept pace with higher home prices. In this brief, we examine trends in home prices and incomes across a range of urban and rural communities. What areas of the country are experiencing the greatest impact from rising home prices? Are there communities where increased incomes have kept pace with home prices?
What’s happening nationally?
Nationally, median home values have increased 63.6% from 2010 to 2023. During this same time period, median household income has risen at a slower pace, 50%. This data indicates that in general home ownership is becoming less affordable relative to income. However, this comparison may hide important cross-community differences: trends in rural areas or suburbs may be very different than in high-population urban areas.
What’s happening to local home prices?
We use an urban-rural scale developed by the U.S. Department of Agriculture that divides counties into nine groups based on their population, the size of the largest community, and whether the county is next to a major urban center. For our analysis, we collapse this scale into four groups: metropolitan or urban counties, micropolitan or suburban counties, rural counties adjacent to a metro county, and isolated rural counties. Our analysis includes 3000+ counties in the U.S., excluding Connecticut and Washington DC because of missing data.
The first chart below shows these four groups’ average home price increases from 2010 - 2023. Based on the data, prices increased throughout the nation. However, contrary to the majority of media coverage placing emphasis on home prices in large cities, the greatest price increases have occurred in rural communities.
The next chart compares the increase in average home prices in each group of counties to the change in average household income. We do this by creating a ratio, dividing each county’s change in home prices by the change in average income. A ratio of greater than one means that home price increases outpaced income over time, making home ownership less affordable. A ratio of less than one means that homes became more affordable.
In every county type, home prices increased more than household incomes. However, there is variation. Rural counties saw, by a notable amount, the highest growth in home values relative to income. Put another way, while housing has become less affordable throughout the U.S. over the last decade for most, those living in rural communities that are far from major metropolitan areas are experiencing the greatest challenges related to housing affordability.
The Takeaway
Even as large metropolitan areas have received much media coverage for housing affordability, rural areas have experienced the largest spikes in home prices since 2010.
Across both urban and rural communities, growth in average income has lagged behind increases in housing prices, although the greatest disparities are in rural areas.
Further reading
Feiveson, L., Levinson, A, & Wertz, S. (2024) Rent, House Prices, and Demographics. U.S. Department of the Treasury, https://tinyurl.com/2hxcumhj, accessed 1/11/25.
Khater, S., DeFranco, R., & Yao, K. (2024) The Decline in Relative Housing Affordability and the Impact on Homebuyer Search Behavior, Freddie Mac, https://tinyurl.com/y7ca7895, accessed 1/5/25.
Sources
U.S. Census Bureau - American Community Survey (2023) 5-year Median Home Value Estimates. Available at https://tinyurl.com/4fw7xd8t, accessed 12/13/24.
U.S. Census Bureau - American Community Survey (2023) 5-year Median Income Estimates. Available at https://tinyurl.com/bde6k3uz, accessed 12/13/24.
U.S. Census Bureau - American Community Survey (2010) 5-year Median Home Value Estimates. Available at https://tinyurl.com/4fw7xd8t, accessed 12/13/24.
U.S. Census Bureau American Community Survey (2010) 5-year Median Income Estimates. Available at https://tinyurl.com/bde6k3uz, accessed 12/13/24.
U.S. Department of Agriculture. 2024. Urban Influence Codes. Available at https://tinyurl.com/ya8a5vmz, accessed 12/16/24.
Contributors
John Arnold (Intern) Is a sophomore at Binghamton University majoring in Political Science and Economics
Robert Holahan (Content Lead) is Associate Professor of Political Science and Faculty-in-Residence of the Dickinson Research Team (DiRT) at Binghamton University (SUNY). He holds a PhD in Political Science from Indiana University where his advisor was Nobel Laureate Elinor Ostrom. His research focuses on natural resource policy, particularly in domestic oil and gas production, but also extends into international environmental policy. He was PI on a National Science Foundation grant that utilized a 3000-person mail-based survey, several internet-based surveys, and a series of laboratory economics experiments to better understand Americans’ perspectives on energy production issues like oil drilling and wind farm development.
William Bianco is Professor of Political Science at Indiana University and Founding Director of the Indiana Political Analytics Workshop. He received his PhD from the University of Rochester. His teaching focuses on first-year students and the Introduction to American Government class, emphasizing quantitative literacy. He is the co-author of American Politics Today, an introductory textbook published by W. W. Norton now in its 8th edition, and authored a second textbook, American Politics: Strategy and Choice. His research program is on American politics, including Trust: Representatives and Constituents and numerous articles. He was also the PI or Co-PI for seven National Science Foundation grants and a current grant from the Russell Sage Foundation on the sources of inequalities in federal COVID assistance programs. His op-eds have been published in the Washington Post, the Indianapolis Star, Newsday, and other venues.
