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Boston Globe

Want to understand why the Massachusetts housing market is broken? Look at this chart.

In other words, housing costs in Massachusetts have grown much faster than incomes, creating a financial gap that, to many, can feel insurmountable. 'The gap between what people make and what homes cost is completely outrageous,' said Albert Saiz, an associate professor of urban economics and real estate at the Massachusetts Institute of Technology. 'And this data does not even represent the situation for working-class families who are making minimum wage. A large portion of the state's population cannot afford to buy a home here, which is not how a housing market is supposed to function.' Economists consider the ratio of home prices to incomes to be a reliable indicator of the state of a housing market. Typically, a house-price-to-income ratio of three — a median household income of $100,000 and median home price of $300,000, for instance — is seen as healthy. Related : Advertisement In Greater Boston in 2023, that ratio was 6.3, according to Harvard's Joint Center for Housing Studies, more than double that healthy rate. Advertisement It wasn't always this way. In the 1980s, the region's house-price-to-income ratio hovered around three, before beginning a slow ascent leading up to the 2000s, when it began to climb rapidly. An apartment building under construction in Revere in 2023. David L. Ryan/Globe Staff The last time the price-to-income ratio here was this high was in the mid-2000s, in the lead-up to the housing market crash that spurred the Great Recession. The force behind the growing gap between incomes and prices is The rise in home prices is not just about how many homes the state builds each year, said Keren Horn, an associate professor of economics at UMass Boston. It is also about the kind of homes developers build. For decades, builders here built smaller, relatively affordable 'starter homes' in the suburbs of Boston. Today, most single-family homes that are built are larger 'McMansions,' in many cases on the lots of older starter homes that are torn down to make way. That trend is partially related to the high cost of land, especially in Greater Boston, but it contributes to rising house prices nonetheless. 'We're seeing decades and decades of bad housing policy catching up to us,' Horn said. 'Housing is supposed to be affordable to the people who need it. We can't expect to have a healthy region if the current price trajectory continues.' The soaring price tags for homes wouldn't matter quite as much if incomes were keeping pace, but they haven't. From 1987 through 2022, the median income in Massachusetts grew by roughly 190 percent, while the price for the typical single-family home grew by close to 300 percent. Advertisement Housing has always been expensive in Massachusetts, by national standards. But Massachusetts, especially Greater Boston, also has higher incomes than most of the rest of the country. Still, now, to afford the typical house here, a household needs to earn roughly $217,000 a year, according to Harvard's housing center. Related : What the yawning gap between house prices and incomes amounts to is, effectively, a change in who can hope to own a home here. In the 1980s and before, when incomes and home prices were in sync, homebuying was an accessible tool of wealth-building for the working and middle classes. Many families who bought in those days have seen their home values double, triple, or even quadruple, becoming an asset for younger generations. That same pathway to generational wealth is now far more difficult to access. That leaves many average earners in younger generations two options: rent, seemingly forever, or leave the state. 'We are going to witness a huge generational divide, in terms of access to wealth,' Saiz said. 'Or people are just going to find somewhere else to live.' Andrew Brinker can be reached at