12 May 2025
Izzy Wollfarth
Contributing Writer
What was once a milestone for many, and a cornerstone of the American Dream, has become one of the greatest financial burdens Americans face today: homeownership. This burden is one borne of inflation, fluctuating interest rates and the cost of insurance.
Louisiana resident Chris Rizzo recently purchased a home after five long years of searching. “You’re kind of looking for that dream home that isn’t out there. You have to settle for something,” he said.
Construction Coverage, a leading publisher of construction industry research reports, captures the divide between income and housing prices in their recent report, “Cities with the Highest Home Price-to-Income Ratios.” The report compiles data from the Economic Policy Institute, Zillow, the Federal Reserve System, the U.S. Bureau of Labor Statistics and the U.S. Census Bureau.
Jonathan Jones, the author of the study, measured housing affordability against wages and income. In the report, he states, “Since 2000, median household income in the U.S. has grown by 92%, climbing from $41,990 to $80,610. But during that same period, median home prices have nearly tripled, jumping 177% from $122,775 to $339,937.”
When asked why wages aren’t keeping up with housing prices, Jodi Archer, a real estate agent and former CEO of the Keller Williams Gretna office said, “That’s a big question because there’s so much to it.” She continued, “I still feel that in our area the affordability of housing is challenged for our market, especially for those first-time buyers.” Archer notes that Louisiana wages are still lower than the national average, making the increasing housing market a potential threat.
The median home price for New Orleans has climbed 3.6 percent since 2000. As of 2025, New Orleans ranks 35th on the list of least affordable housing to most with an income ratio of 4.2, a median home price of $232,943, and 40.8 percent of mortgage holders spending more than 30 percent of their income on housing. Other Southern cities like San Antonio and Fort Worth fall below New Orleans along with Memphis coming in at 52nd.
Some of the cities with the highest home price-to-income ratio are in California, New York and Maryland. The top five cities all have a price-to-income ratio of 10.0 or higher, which is above the national home average, 4.6.
“In places like California and New York City, high housing prices were already a longstanding issue due to restrictive zoning and limited buildable land. Even with slower recent price growth, existing price levels remain extremely high relative to income, which continues to drive up price-to-income ratios,” said Michael Stromberg, CTO at Construction Coverage.
The gap between income growth and housing cost is nothing new and has rapidly increased since the pandemic.
“The pandemic created a perfect storm that reshaped the housing market in ways that continue to impact affordability today. Remote work and historically low interest rates triggered a surge in demand, while supply was constrained by labor and material shortages. At the same time, investor-driven demand – particularly from institutional buyers – intensified competition for single-family homes, pushing prices even higher,” Stromberg noted.
Rizzo also reflected on his experience searching for a home amidst the pandemic. “Houses were skyrocketing in price that you couldn’t even bid on one, like there were five bids on the house before you could even get your bid in.”
The pandemic and income rates are just one piece of the housing puzzle. The impact of interest and inflation frequently deters investments in homes. “I agree with the report that housing prices increased over time between 2000 and 2024. But I think we can blame the interest rates because between 2020 and 2024, we had two interesting events. We had the Great Recession and then we had the pandemic recession,” said Dr. Leo Krasnozhon, an associate professor of economics at Loyola University New Orleans.
The Federal Reserve responds to recessions by lowering interest rates which coincides with inflation. The goal is to stabilize the economy, but much of the burden falls on market consumers.
Archer acknowledged the difficulties her clients face. “I feel it’s the combination of the insurance and the current interest rates combined. I think if one was impactful, then we can work through that. It’s when you put both of them together, that causes some buyers to either need to take a pause and potentially save more money or just wait to see what’s going to happen.”
While the sticker increase is daunting, the income-to-housing ratio for New Orleans is less than the national home price-to-income ratio, making New Orleans homes more affordable than the national average. Shreveport also remains one of the most affordable cities in Louisiana. Krasnozhon also encourages readers to look at the report holistically, noting the difference between wage calculations and income values in national and local data. “There’s a famous saying in economics: There are three kinds of lies. Damned lies, very bad lies and statistics. You have to be careful with numbers,” Krasnozhon quipped.
Searching for a home can be stressful, but homeowners have options and resources they can turn to in times of crisis. “There are first-time home buyer programs available. There are rural development programs available. There’s Louisiana Housing Corporation available, for instance, which, if the buyer qualifies, offers them four percent down payment assistance that they can use either towards their down payment or closing costs,” Archer says.
Educating oneself on the ever-evolving market and economy is also encouraged.
Likewise, there are other housing options that fulfill homeowners needs at lower costs. Stromberg said that “Smaller-footprint homes, manufactured housing, and higher-density zoning (like duplexes and accessory dwelling units) offer more affordable options without sacrificing long-term value.”
Sometimes it’s about knowing the market and keeping pace, other times it’s negotiating with the seller or having a real estate agent at one’s back. But most of the time, finding the best housing option is only a matter of time.
This article originally published in the May 12, 2025 print edition of The Louisiana Weekly newspaper.