Why are homes so expensive in these five states?
The short answer
Hawaii, California, Massachusetts, Washington and Colorado. In every one of them, mountains, oceans or limited land leave too little room to build, while demand keeps rising.Housing prices are usually blamed on interest rates and wages. But look at a map of America's most expensive states and a pattern jumps out: the land itself is part of the problem. You can't build houses on the ocean, up a cliff or on land that isn't there.
The five least affordable states
These are the median home prices quoted in the video.
- Hawaii: $957,800. It's a chain of volcanic islands with steep mountain interiors, so flat, buildable land is scarce. Nearly everything, including building materials, has to arrive by ship.
- California: $906,500. Its biggest cities are trapped between mountains and the Pacific. San Francisco is surrounded by water on three sides, and Los Angeles is hemmed in by mountain ranges.
- Massachusetts: $702,400. Boston has limited land around its harbor, and strict local zoning rules keep new housing scarce in the towns around it.
- Washington: $690,100. Seattle sits on a narrow strip between Puget Sound and Lake Washington. Tech-driven growth has pushed prices far beyond what local incomes have kept pace with.
- Colorado: $671,100. The Front Range cities, Denver, Boulder and Colorado Springs, sit right where the plains hit the Rockies. They can only spread one way.
Wait, what?
A 1920 law called the Jones Act says goods shipped between two US ports must travel on American-built, American-owned ships. For Hawaii, that adds cost to almost everything it brings in from the mainland.
The geography of a price tag
Economists have tested this. A well-known study by MIT economist Albert Saiz measured how much land around each US city is blocked by water or steep slopes. The cities with the least usable land, such as San Francisco, Los Angeles, Seattle and Miami, were also the ones where prices climbed fastest. When demand rises somewhere the land can't stretch, the only thing left to rise is the price.
Did your state make the list? Tell us in the comments on the Short.
Watch the ShortSources: Median prices as cited in the video; Albert Saiz, "The Geographic Determinants of Housing Supply," Quarterly Journal of Economics (2010).