The Amazingly High Cost of Housing

Newly built home in Mequon. Photo taken Oct. 14, 2025 by Dave Reid.

This week’s State of the City address by Milwaukee Mayor Cavalier Johnson was all about housing. He touted efforts to increase home ownership and create more affordable rental housing, as Urban Milwaukee reported.

That might sound like a city issue, for those who are less well-to-do. In fact, the problem of “housing affordability” and “housing availability” noted by the mayor is one that has become a massive issue across America. The statistics on this are jaw dropping.

Data from the Federal Reserve Bank of St. Louis, which tracks the cost of housing, show the cost of an average house rose from $19,300 in 1963 to $202,000 in 2000 and $514,000 today. The price is now 2.5 times higher than in 2000 and 27 times higher than in 1963.

That’s an increase nearly three times higher than the rise in inflation since 1963, but a far more telling figure is how this compares to the rise in wages. The average hourly wage is about six times higher than in 2000 and 12 times higher than in 1963. This has created a massive gulf between the cost of housing and average incomes, creating an American economy that seems, well, pretty un-American. To wit:

-By 2024, the National Association of Home Builders found that “77% of households cannot afford a median-priced new home” and that the minimum income required to afford the median-priced home is more than $150,000.

-That same year, the National Association of Realtors found the average age of a first-time homebuyer in the U.S. reached an all-time high of 38.

-17% of 25 to 35 year-olds are still living with their parents — the highest rate since 1940. 

-Since 1960, the share of 25 to 35 year-olds who can afford the median rent in their county has plummeted from 60% to 18%.

The statistics go on and they are all shocking. Estimates of the current housing shortage say it could be as high as 7 million units. But builders aren’t building because buyers can’t buy: so many people under 35 can’t afford to buy a home or even rent an apartment.

How does Wisconsin fit into this picture? Far fewer homes are being built in this state, down from at least 30,000 each year between 1994 and 2005 to about 21,000 in 2022, according to a 2024 report by the Wisconsin Policy Forum (WPF). By 2030, Wisconsin is expected to need 200,000 new homes, but it is currently not even close to keeping pace, noted one state legislator’s analysis.

“Housing prices have skyrocketed in Wisconsin for both home buyers and renters, raising concerns that homeownership has become less accessible and that renters are increasingly strained,” the WPF study noted.

A general rule for real estate agents is that homebuyers can afford to spend up to 2.6 times their household income on a home. In Wisconsin, homebuyers are now spending four times more than their household income, according to an analysis of Census Bureau and Zillow data. That was higher than in 18 other states, including all four neighboring states in 2024. Hawaii was at the top in costs with a ratio of 9.1 and West Virginia at the bottom, at 2.9 times average household income.

In short, every state is above the maximum a homebuyer should pay of 2.6 times household income, and Wisconsin’s costs are the highest in the Midwest but slightly below the national median ratio of 4.4 times household costs.

This is clearly a crisis for America and Wisconsin. While the measures promoted by Mayor Johnson will help, Milwaukee’s housing issues are part of a state and national problem that needs far-reaching solutions. The Wisconsin Legislature passed, and Gov. Tony Evers signed, a 2026 bill that seeks to bring more clarity to local zoning ordinances, reducing confusion and red tape for housing developers, but the proposal falls short of what’s needed.

It’s a national problem and a national solution is needed, but in an age of hyper-partisanship that’s a tough task. Congress is actually trying to pass the Road to Housing Act, a major package of some 40 proposals intended to increase the supply of housing, but the Senate and House cannot agree on the details.  And President Donald Trump has other priorities, including his plan to disenfranchise millions of voters and his push to provide funding for his ICE agents.

And while the federal housing legislation could help increase the supply it does little to address the demand side. The wages of average Americans have not kept up with the cost of housing. In Wisconsin, raising the minimum wage from $7.25 to $15 would be a big help, with likely ripple effects on the entire structure of wages in the state. Support for unions, by ending Wisconsin’s Right to Work law and federal efforts to strengthen the National Labor Relations Board, would also help raise wages.

A specific solution for Wisconsin comes from a surprising source: the conservative MacIver Institute, which did an impressive, in-depth report called “The Housing Crisis Hits Wisconsin.” The report went after local zoning regulations, which are common in suburbs and exurbs, with lot-size and home-size requirements that rule out anything but big, pricey, single-family homes most people under 40 simply can’t afford.

The report references a study of Houston after the minimum lot size was reduced from 5,000 square feet to 3,500 and 1,400 square feet. The result: Houston’s total housing stock increased by 10.8% compared to 6.5% nationally during the same period, and its stock of multifamily housing, buildings with five or more units, increased by 14.8% compared to 1.5% nationally. “The result of this reform was that Houston’s housing expense ratio (HE ratio) fell to 3.3 times the median income in 2020” — this at a time that Wisconsin’s average was then 3.9 times the median income.

Does the Republican MacIver Institute understand its recommendation for zoning changes would have by far the most impact on suburban and exurban voters? Whatever the thinking behind it, the report could help build support to open up a major choke point in the supply of housing in Wisconsin. The idea of this state’s Democrats pushing a Texas-style, MacIver Institute solution to the housing supply could make for some very interesting discussions in the state Capitol.