By the surest measure of housing affordability — the share of income households spend on rent or mortgage, plus other housing costs like property insurance — the Midwest is the most affordable region in the country. Contrary to some popular narratives, this isn’t a story of depressed local economies reeling from deindustrialization or an opioid crisis with seas of vacant homes.
According to our research, the most affordable metropolitan and micropolitan areas1 (or CBSAs) in the U.S. today are concentrated in Wisconsin, Iowa, Indiana, Ohio, and western Pennsylvania. In 2024, nine of the ten most affordable CBSAs were Midwestern, seven had a strong manufacturing core, and all ten ranked in the top half nationally for household income. These places are middle-class, with median household incomes around $75,000 and mean household incomes well into the six figures. They have modest population growth, low unemployment, and low poverty. Young adults with ordinary jobs are buying homes without breaking the bank. In many ways, these are communities where the American Dream is still alive.
Take Le Mars, Iowa. Dubbed the ice cream production capital of the world, it was the most affordable housing market in the country in 2024: the typical resident spent just 17 percent of their income on housing costs that year. It is also comfortably middle-class, with a median household income of roughly $83,000, and thousands of residents employed by the Blue Bunny ice cream manufacturing plant. Warsaw, Indiana, is another affordable place for both renters and owners, with a growing industrial economy. More than a third of its jobs in 2024 were in manufacturing, and the region recently secured a $400 million investment for a new factory specializing in electric pickup trucks.
These communities are economically thriving and homes are still attainable. As the map above shows, while the Midwest is full of affordable communities, across much of the rest of the country they’re rare. The West Coast and the Northeast corridor are famously expensive. But we find that even in Sunbelt states like Florida and Texas, which have a reputation for cheap housing, every one of their most populous metros is unaffordable too. What has enabled the Midwest to succeed while so much of the rest of the country struggles?
What makes places unaffordable?
When housing costs start climbing, people often blame income or amenities. Both explanations are about demand: who wants to live in a place, and what they can afford to pay once they’re there.
The income story comes in two versions. In one, high-paying jobs in industries like tech and finance attract workers who bid up home prices for everyone. This is indeed one reason that superstar metros like Los Angeles and New York are so unaffordable.
In the other, the loss of good-paying jobs results in incomes too low to cover even the existing housing stock, as in unaffordable distressed metros like Monroe, Louisiana, and Laurinburg, North Carolina. But across all CBSAs, the link between median household income and cost burden is only weakly positive, and plenty of middle-income places — like Eureka, California — are highly unaffordable too.2 Incomes alone — whether high or low — don’t explain unaffordability.
Another theory is that the most expensive housing markets are simply the most desirable places to live, whether because of cultural amenities or gorgeous weather. Many of the least affordable places in the U.S. today are coastal, like the beach towns of Florida and Southern California, where good weather, natural beauty, and strong tourism and hospitality sectors keep drawing transplants. Key West, the least affordable market in the country in 2024, is the archetype. The typical household there spends 34 percent of its income on housing — twice the share in Le Mars. Year-round sunshine keeps demand high and the economy runs on hospitality jobs that pay far less than finance or tech. As an additional burden, property insurance costs are rising fast.
Demand, though, is only half of the housing equation. Basic economic theory predicts that housing will be least affordable where the demand for homes most exceeds the available supply. And that mismatch can be measured.
The supply gap
Up for Growth, a pro-housing advocacy group, has estimated the rate of housing underproduction. In their methodology, it’s the gap between the homes a region needs and the habitable homes it actually has. Need includes both existing households and those that would likely form if they could, like young adults still living with their parents. By comparing these estimates with cost burdens across CBSAs, we find that housing shortages track closely with unaffordability. The least affordable places have both the largest and the longest-running shortages.
In 2023, the typical unaffordable market was short by an amount equal to 2.4 percent of its existing housing stock. Meanwhile, affordable markets were short by only 0.6 percent, and for much of the past decade they ran a surplus. While shortages have emerged throughout most of the country since 2012, unaffordable places have deeper gaps.
Los Angeles has run a shortage of 7 to 8 percent of its housing stock every year of the past decade, roughly 334,000 missing units. Even fast-growing metros that have built aggressively haven’t kept up with demand. Miami’s shortage spiked past 8 percent in 2019 before easing to 4.5 percent by 2023. Naples, Florida, grew its housing stock by a quarter over the decade and still crossed from a surplus in 2012 into a shortage by 2023, as demand outpaced rapid construction.
Where the shortage is money, not homes
The relationship between shortages and cost burdens holds in nearly every type of market, with one exception. When we sort unaffordable markets into quartiles by median household income, it holds everywhere except the bottom quartile. Low-income unaffordable places generally don’t have a housing shortage, and many run a surplus. Their unaffordability is a result of economic distress: cost burdens are high because incomes are so low, not because of housing underproduction. This result isn’t surprising. Where low incomes and weak demand are what hold back population growth and household formation, a shortage of homes isn’t the binding constraint.
Monroe is one such place. The birthplace of Delta Air Lines, the northeast Louisiana metro was once thriving, but has since thinned out. Its population is shrinking, the typical household earns about half the national median, and a quarter of residents live in poverty. Monroe has a housing surplus equal to more than 3 percent of its stock, yet its residents suffer from unaffordability. Macon, Georgia, has a similar story, with nearly 15 percent of its homes sitting vacant today. In places like Monroe and Macon, building and housing reinvestment won’t happen on their own since new construction largely doesn’t pencil out. The result is that these CBSAs suffer from a mismatch between incomes and housing costs, despite the overall housing surplus.
This does not imply that place-based policies incentivizing preservation and new construction in distressed places are inherently unhelpful, of course. A distressed zip code or Census tract next to a high-income, high-opportunity one is fundamentally different from a distressed region far from any jobs; adding homes in the first kind of place can help to ease affordability concerns as opportunities attract newcomers and add cost pressure on existing residents. Additionally, even if there is a surplus of homes overall, there may still be a shortage of certain types of homes. Several low-income and unaffordable metro areas with a housing surplus are large college towns, like Gainesville, Florida, that have a serious mismatch between the population of single renters and the stock of apartments. In these cases, allowing for more construction of the kinds of homes that better fit local needs could help to ease costs.
With those caveats aside, low-income metropolitan and micropolitan areas account for only 3 percent of the national population. For nearly everyone else, affordability is linked to how well supply is meeting demand. This is a straightforward lesson that affordable places in the Midwest today should not take for granted.
Storm clouds on the horizon
For much of the past decade, the Midwest lost residents to other regions as young people migrated to major job centers on the coasts and in the Sunbelt. Its overall population grew only modestly, due to births and international migration. However, there’s been a brewing pressure in the background: like much of the country, the composition of households in the Midwest has been changing. New households have been forming faster than population growth. As seniors age into smaller empty-nester homes and younger adults spend more years living alone and having fewer children, the same number of people is splitting into a greater number of households. In Wausau, Wisconsin, the population has grown just 4 percent since 2014, but the number of households has grown 11 percent. Definitionally, household growth — not population growth — is the metric that matters for housing.
But now a second source of demand is arriving. In 2025, the Midwest recorded positive net domestic migration for the first time in a decade, as more Americans moved in from other states than left. It’s a small shift so far, but it signals that the same demand pressure that made other regions unaffordable may now be moving to the heartland. For the Midwest, the Mountain West region offers a warning. Though it once had many of the same affordability characteristics as the Midwest, the Mountain West now looks a lot like the West Coast. After a large pandemic-era demand surge, Colorado and parts of Idaho, for example, now have housing affordability problems reminiscent of those in California, Oregon, and Washington. The Midwest has not yet had to build fast, which is one reason its shortages have stayed small.
But in a number of Midwestern CBSAs the problem is starting to surface. Appleton, Wisconsin, ran a housing surplus in 2012 equal to about half a percent of its stock; by 2023 it had swung to a shortage of nearly 6 percent, the largest gap among affordable places. Jefferson City, Missouri, still had a surplus as recently as 2019, but now runs a shortage close to 3 percent. Wausau followed the same path, and even slow-growing Sheboygan, Wisconsin, has recently tipped from a surplus into a modest shortage. In each case the mechanism is identical to the costlier regions of the country: household growth is outpacing new construction.
What it will take
The evidence that supply lowers costs is abundant. Study after study finds that building more housing slows price growth. The obstacle is that in most places, restrictive land-use rules make building enough of it overly burdensome or outright illegal.
Some of that is beginning to change. A wave of state-level zoning reforms and the passage of the federal 21st Century ROAD to Housing Act are real steps. In the Midwest, major citywide reforms in Minneapolis and Columbus are poised to help. But the country is still millions of homes short.
Rather than mandating specific outcomes from the top down, a promising policy approach rewards the places that actually permit housing and lets each community meet its own needs — the idea behind EIG’s Right-to-Build Zones. Building more won’t fix everything; distressed places need place-based policies that bring investment and jobs more than they need housing permits. But for most of the country, the binding constraint is simply that there aren’t enough homes. It’s time for America’s last affordable places to heed the warning.
The country is divided into core-based statistical areas, or CBSAs. Per the Office of Management and Budget, a CBSA is an area that contains a central county with a substantial urban population, along with any adjacent communities that have a high level of integration with the central county. The largest are metropolitan areas like Los Angeles; the smallest are micropolitan areas built around a single city, like Le Mars, Iowa.
The correlation between median household income and housing-cost burden at the CBSA level is 0.19.