The Midwest has been America's best deal in housing for more than a century

The divergence in the growth of home prices in American cities over the last 134 years is stark.

Home prices in America have changed dramatically over the last century - but the Midwest has remained a bastion of affordability through it all.

As the rest of the nation has experienced large boom-and-bust cycles and now faces a persistent housing-affordability crisis, home prices in certain Midwestern cities have been mostly flat for more than a century.

The divergence in the growth of home prices in American cities over the last 134 years is stark. Between 1890 and 2024, sale-price indexes indicate that home prices were up over 1,000% in San Diego and Los Angeles, and nearly half as much in Boston. The U.S. nationally saw a 354% jump.

But in a Midwestern city like St. Louis, prices over that time period have only gone up about 6% when adjusted for inflation. In Cleveland, the figure is about 18%. That's according to new analysis and data collected by researchers at the Federal Reserve Bank of Philadelphia.

St. Louis was the second-largest city in Missouri as of 2025, behind Kansas City, according to the U.S. Census Bureau.

The length of the data series is noteworthy. The researchers spent nearly a decade putting together home-price data by collecting 2.7 million real-estate listings that appeared in newspapers, going back to 1890, by hand. They were then able to construct an annual market-rent and sales-price series for several big cities in the U.S.

The findings are even more striking. Based on that database, they found that among the cities that they looked into, St. Louis saw the smallest increase in relative home prices, as detailed in the chart above. The researchers analyzed for-sale listings that appeared on the St. Louis Post Dispatch between 1890 and 2006. (The publication did not respond to a MarketWatch request for comment.)

Affordability has always been St. Louis's forte, local real-estate agents told MarketWatch. Sam Hall, co-founder of the Warner Hall Group and the 2026 president of the St. Louis Realtors, told MarketWatch that St. Louis has had "long-term durable affordability." The city and its eponymous county have had enough land to build more housing if the need arose, but population growth has stalled out, leaving St. Louis well supplied with homes.

St. Louis resident Kathy Helbig has been in the real-estate industry for the last 30 years. She does not recall ever having a conversation about housing affordability in the city.

"St. Louis never had the ingredients for it," Helbig, an eXp Realty agent, told MarketWatch. "We never ran out of land. Our population hasn't really spiked. We've never not been an affordable city - ever."

Housing supply has kept up with demand

Why have home prices been so stunningly stable in the Midwest, while cities like San Diego and even Dallas have seen faster price growth?

A key part of the reason is due to housing supply. Cities like Pittsburgh had built enough housing to meet demand by 1920 and 1930, Fed researchers told MarketWatch. In the report they published about the data, the researchers said they found that "nearly every city in the U.S. responded to the 1920s housing boom by constructing new housing," before they decided to go different paths after World War II. "Some cities, like Philadelphia and St. Louis, entered the postwar period with sufficient housing to meet much of the demand over the rest of the country."

So in other words, as the century unfolded, the housing stock in Rust Belt cities was able to absorb demand.

Other cities didn't build enough housing to keep up with demand. In cities like Los Angeles and San Francisco, housing construction slowed down, and that resulted in surging home prices, the Fed researchers said in the report.

Sun Belt cities like Atlanta and Dallas were in the middle, as these cities were able to build housing when demand appeared, the researchers found. Restrictive zoning is also a key reason why some cities responded more quickly to housing demand. In the Sun Belt, relatively looser regulatory requirements spurred more new-home construction, which in turn boosted housing supply. In cities such as in California, more restrictive zoning led to tight supply, which pushed up home prices.

St. Louis is one of the most affordable housing markets in the U.S.

In St. Louis, nearly 60% of homes for sale are considered to be affordable - the second-highest share among all cities analyzed by Zillow (Z) $(ZG)$ in a recent report. Buffalo, N.Y., took the top spot.

Home prices in St. Louis are lower than average. Helbig, the real-estate agent, said the median home price in St. Louis County, which is the area that surrounds the city, was about $313,000 as of the end of July. Homes spent roughly 25 days on the market. Within the City of St. Louis, homes sold for lower, at around $240,000, and spent 35 days on the market.

The median existing-home sale price nationally in July was about $434,000, according to the National Association of Realtors.

There are pockets where wealth is concentrated within the county, Helbig noted. Homes in suburbs adjacent to elite private schools often sell for more, she said, based on her experience. For instance, one single-family home in Ladue, an affluent suburb of St. Louis, is currently listed for $6.1 million, and another custom home is listed for about $3.8 million.

St. Louis is also home to several financial institutions, Hall added, including Edward Jones and Stifel $(SF)$. Other big employers in the city include Washington University in St. Louis, as well as hospitals and medical centers. Economic development driven by these employers help push up nearby home prices.

St. Louis renters typically find it easy to transition into homeownership, Helbig said, since the gap between renting and paying a mortgage isn't that wide. The median rent in St. Louis was about $1,200 in January of this year, according Realtor.com data as of August, while the median home listing was about $199,900, which translates to a monthly payment of about $1,500 with a 10% down payment and a 30-year mortgage rate of around 6.63%, according to Bankrate's calculator. As the financial gap between renting and owning is not as large compared to other big cities, "we're able to convert a lot of renters into buyers," Helbig said.

(Realtor.com is operated by News Corp subsidiary Move Inc.; MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

But home-price stability comes at a cost. Even though Midwesterners paid less for their homes, they have not seen their property values rise as much, and thus have accumulated less wealth through their homes. Most of the wealth that middle-class American families hold stems from residential property values.

St. Louis's population hasn't grown enough to spur a surge in housing demand

Another key reason why home prices have largely been stable in the Midwest is due to population-growth trends.

Housing demand hasn't really surged in the city of St. Louis. Between 1890 and 2025, the city's population fell from around 452,000 to 278,144, a 38% drop, according to data from the U.S. Census Bureau. San Diego's population, in contrast, grew from 16,000 to 1.4 million between 1890 and 2025, which was a 8,600% jump, while Los Angeles's population grew by about 7,500%.

The loss of local manufacturing jobs helped suppressed demand in places like St. Louis. The real-estate market is closely connected to the job market, and when people lose their jobs or there are fewer new jobs available, it's much harder for them to buy a house - and that keeps a lid on how much prices can go up. The chart below shows the decline in manufacturing jobs in the St. Louis metro area, which refers to surrounding regions such as St. Louis County and St. Charles County.

Will the Midwest remain affordable?

Amid today's U.S. housing crisis, the Midwest has repeatedly emerged as an attractive, cheap option for aspiring home buyers.

The data indicate that the Midwest might still be a more affordable region, but not necessarily for locals. In May 2019, a typical household making the median income of about $66,000 could afford a median-priced home in St. Louis at $185,000 with an interest rate of 4.1%. Their total monthly housing costs would be about $1,200, according to data from the Federal Reserve Bank of Atlanta.

In May 2026, elevated mortgage rates and home prices raised that figure. Even though households were earning more - with median incomes around $85,000 - an interest rate of 6.4% on mortgages and a median home price of $257,000 meant that one's monthly housing costs were up to $2,100.

Home-insurance costs have also become a pain point in St. Louis, Helbig said. St. Louis lies near "Tornado Alley," which refers to the region in the center of the U.S. where tornadoes occur the most. Insurance costs have gone up significantly as severe storms, hail and occasional tornadoes plow through the area, Helbig noted.

St. Louis homeowners pay an annual average of $2,619 for homeowners insurance, according to Insurify, an insurance startup. That's about $218 per month. The national average was $2,584 per year, according to Insurify.

-Aarthi Swaminathan