Even after the burst of the housing bubble, the American Dream of home ownership has remained alive in some places. As it turns out the “bubble” was far from pervasive, and as Nobel Laureate Paul Krugman indicated in The New York Times, the housing price increases were largely limited to the areas of the nation with stronger land use regulation.
In all, at the peak of the housing bubble, 46 of 129 US markets had house prices at or below the historic ceiling of three times household incomes (see 4th International Demographia Housing Affordability Survey). Before the bubble, nearly all markets were at or below that norm, but many have risen to double, triple or even more than three times the standard.
The American Dream can be said to have started with William Levitt, who revolutionized home building starting with his huge Levittown, New York development in the late 1940s.
As Witold Rybczynski wrote in a recent Wilson Quarterly article, new Levittown houses could be purchased for three times the average wage in Levittown. This bought a detached 750 square foot house, without a garage. Interestingly, this was at a time when single-income families were still the norm.
Levittown is the birthplace of the modern American Dream. It was only after the pioneering model of Levittown that home ownership became the norm by becoming affordable to middle-income and blue collar households in America. At the end of World War II, home ownership in the United States was 40 percent. By 1960, it exceeded 60 percent and since risen to above 65 percent.
Levittown, and the automobile-oriented urban expansion it foreshadowed, resulted in the greatest democratization of prosperity in history. Wherever mass suburbanization occurred – whether in the United States, its first world cousins Canada and Australia, Western Europe or later even Japan – we have seen the unprecedented rise of a mass property-owning class.
This economic and social advance was built on liberal land use regulation. It would not have been possible if the policies that have poisoned housing markets from Los Angeles and Portland to Miami and Boston had been in effect at that time.
Yet there is still life outside the high-priced coastal regions. Indeed in much of the country today, new housing affordability is at least as good as it was in Levittown. Generally, where land regulation has remained reasonable, new houses can be purchased for less than three times median household incomes. Purchasers may need two incomes to get there, but the effect remains the same. Moreover, the houses in these markets generally boast two-car garages and living space nearly double that of the typical Levittown ‘starter’ house.
The small selection of examples below is limited to metropolitan areas with high housing demand. These are not economic basket cases like those in and around certain old industrial cities. Nor are these places where the market has evaporated because so many people have left or are planning to leave. Instead these are places attracting domestic migrants from other parts of the country (especially from metropolitan areas with strong land use regulation). These listings are the result of a quick search; they may not necessarily represent the least expensive new houses available. Each has three bedrooms and all have two-car garages.
Atlanta: A new 1,500 square foot for a base price of $130,000 – 2.3 times the median household income View listing.
Austin: A new 1,200 square foot for a base price of $106,500 – 1.9 times the median household income View listing.
Charlotte: A new 1,500 square foot for a base price of $133,000 – 2.5 times the median household income View listing.
Columbia, South Carolina: A new 1,500 square foot for a base price of $130,000 – 2.7 times the median household income View listing.
Columbus: A new 1,400 square foot for a base price of $130,000 – 2.5 times the median household income View listing.
Dallas-Fort Worth: A new 1,250 square foot for a base price of $120,000 – 2.2 times the median household income View listing.
Houston: A new 1,300 square foot for a base price of $100,000 – 1.9 times the median household income View listing.
Indianapolis: A new 1,500 square foot for a base price of $114,000 – 2.1 times the median household income View listing.
Kansas City: A new 1,200 square foot for a base price of $150,000 – 2.8 times the median household income View listing.
The list could go on and on, including virtually every area of the nation that has not driven up the price of developable land by land use regulations. The American Dream is alive and well where it has not been snuffed out by economics-be-damned urban planning policies.