(Bloomberg) — Firefighter Peter Friedel and his wife have checked out some 20 to 30 houses over the last six months in their quest to move into a coveted school district. So far, they’ve come up empty, after making two informal offers on fixer-uppers that weren’t accepted. <\/p>\n
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“The market got so crazy, we just kind of backed off,” Friedel said. <\/p>\n
The hot spot Friedel is navigating isn’t a Southern boomtown or a tony California suburb: It’s Kansas City, Kansas. <\/p>\n
“It’s extremely frustrating,” Friedel said. “We worked so hard, and growing up, the area around here was kind of affordable for the middle class and working class. And that’s just, poof, gone away.” <\/p>\n
The Midwest is often thought of as the last bastion of home affordability in the US, after the Sun Belt saw a dramatic run-up in prices as it attracted residents during the pandemic from already-expensive coastal cities. Now, Chicago, Milwaukee and Kansas City are among the major metro areas where list prices are rising despite a moribund US housing market, eroding the region’s status as a refuge. <\/p>\n
As recently as 2020, virtually all metro areas in the Midwest were considered affordable, according to Federal Reserve Bank of Atlanta data, meaning that the median cost of homeownership in a certain area would not exceed 30% of the median local household income. By July, more than half of roughly 200 metro areas in the region had become unaffordable by that measure, including Flint, Michigan; Des Moines, Iowa; and Indianapolis. <\/p>\n
Relief doesn’t appear to be in sight, with mortgage rates breaching 7% nationwide amid a broad increase in borrowing costs throughout the economy. <\/p>\n
For Americans priced out of buying a house, there has long been somewhere cheaper to go. With affordability now under strain in one of the last regions where it’s been widespread, the path to homeownership is getting narrower. <\/p>\n
Because housing is the largest annual expense for many Americans, its pricing figures heavily into voters’ perceptions of the cost of living. <\/p>\n
That suggests the housing pressures in the Midwest could play a role in November’s midterm elections, including in determining control of the US Senate. Of the seven Senate races ranked as toss-ups by the Cook Political Report, four are in the Midwest: Iowa, Kansas, Michigan and Ohio. <\/p>\n
Housing costs, along with higher gasoline and diesel prices, have become focal points of campaign messaging for candidates across the region. <\/p>\n
Mike Rogers, the Republican candidate in the Michigan Senate race, announced a “seven-figure” ad buy for a spot in which he declares, “I know how to lower housing costs. Let’s train more builders and fire more bureaucrats.” <\/p>\n
Across the Midwest, price per square foot of a home was up 1.7% in September from a year earlier, adjusting for home size, compared with a 1.7% drop nationally, according to Realtor.com data. <\/p>\n
“During the pandemic, the Midwest kind of missed the housing boom,” said Redfin chief economist Daryl Fairweather. “Starting around 2022, when the rest of the housing market slowed down because of high mortgage rates, the Midwest just kept going up. There was more room for the Midwest to grow.” <\/p>\n
That room to grow has recently helped the region support population growth after years of stagnation or decline. Its affordable reputation is drawing buyers in a kind of reverse Yogi Berra-ism: It’s getting crowded because nobody went there before. <\/p>\n
The median list price for a home in the Midwest in September was 47% higher than it was before the pandemic, according to Realtor.com, representing slightly higher growth than for the nation overall. And homes in the Midwest are getting snapped up more quickly than in any other region, spending a median of 48 days on the market last month versus 61 days nationally. <\/p>\n
Those dynamics have Friedel, 36, worried he won’t be able to lob a winning bid for a four-bedroom home before his oldest son enters first grade next year. His wife works as a nurse and he supplements his income with construction work on the side. <\/p>\n
“The midrange is just gone,” he said. “I feel bad for people who don’t have a dual income; that’s almost a necessity nowadays.” <\/p>\n
Flashing Warning Signs <\/p>\n
Cities across the region are flashing warning signs of a tougher market for buyers: Single-family houses in St. Louis in July hit their least affordable level dating back to at least 2006, according to an index from the Mid America Regional Information Systems, before easing slightly the next month. The Milwaukee metro area has become one of the most competitive housing markets in the US, with 50% of homes selling above their asking price in 2025, according to Zillow. <\/p>\n
Even potential buyers with a financial leg up are getting sticker shock. Haris Khurshid, 33, is looking to buy his first home within “the Chicagoland area,” he said. <\/p>\n
“I thought it would be relatively straightforward; I have a finance background so I started to run the numbers,” said Khurshid, who works at a hedge fund. “The monthly cost just gets super, super high very, very quickly.” <\/p>\n
“Priced out means different things,” he added. “I’m fortunate to be in a situation where I’m not literally priced out, but it doesn’t make it sensible to buy.” <\/p>\n
Dan Brassil, a real estate agent at RedKey Realty Leaders in St. Louis, said buyers now are “way more payment-conscious” due to higher mortgage rates. The cost of everything else associated with homeownership \u2014 insurance, property taxes and utilities \u2014 has also gone up, and buyers are aware of that, he said. <\/p>\n
“Everything is relative,” Brassil cautioned. “While St. Louis is way more affordable than the coastal cities as a major metro area in the US, it has deteriorated somewhat for local buyers.” <\/p>\n
Indeed, Midwest prices overall are still less eye-watering than in other regions, with cities like Grand Rapids, Michigan, drawing young first-time buyers. But buying is getting harder on local incomes. The median list price per square foot in the Midwest in September was up 59.6% from before the pandemic, according to Realtor.com. Incomes have not kept up: Wages for private-sector workers in the region have grown 30% from the second quarter of 2019 to the second quarter of 2026, Bureau of Labor Statistics data show. <\/p>\n
Jake Krimmel, senior economist for Realtor.com, noted that median list prices have grown more in the Midwest than in the South and West compared to pre-pandemic baselines \u2014 largely because the latter two regions have seen price pullbacks and the Midwest has not. <\/p>\n
Bucking the Trend <\/p>\n
Many cities in the South and West responded to the pandemic rush by building more homes, which are now coming online and tempering prices. Those in the Midwest, by contrast, have only recently begun seeing the surge in demand outpace existing inventory, and the supply pipeline isn’t robust enough to provide much relief. <\/p>\n
At the same time, many existing homeowners with cheap mortgages have stayed put rather than take on more expensive loans. <\/p>\n
Against that backdrop, Krimmel said that markets that previously offered refuge from increasing prices are now turning hot themselves. <\/p>\n
“The story we’ve been seeing in the data over the past year or so is that the Midwest broadly, it’s bucking the national trend and its reputational trend,” Krimmel said, with Milwaukee serving as “the outlier example that goes above and beyond.” <\/p>\n
The median listing price in the greater Milwaukee metro area has surpassed that of the much larger Chicago metro area. Though Chicago’s data includes some smaller suburban markets outside Illinois, the contrast still points to just how competitive the smaller city has become. <\/p>\n
Skylar Giuli, 30, saw that fierce competition up close when he sold a home in Milwaukee earlier this year. The electrician had bought the property 10 years ago for $125,000, he said, and sold it for $340,000. <\/p>\n
“We were pretty surprised with how many offers we got and how quickly we got them \u2014 I think we got 15 offers within the first 24 hours,” Giuli said, adding that he and his wife sold the home over their asking price within two days of listing it. <\/p>\n
Getting Outbid <\/p>\n
In Toledo, Ohio, real estate broker Jim Trampevski said the city offers a “haven” for homebuyers compared to nearby areas like Cleveland or Detroit \u2014 evidence of how even within the region, there’s variation in demand and the scale of the supply crunch. <\/p>\n
Yet home prices in Toledo, where the largest employers include healthcare companies and advanced manufacturers, still have risen 7% year over year. <\/p>\n
Heather Smith LaPoint, a real estate agent in Toledo, said she can write offers for clients that are $20,000 to $40,000 higher than the list price, only to lose out to a different offer. <\/p>\n
“If you’re a first-time homebuyer and want to buy a home for $200,000, you and everybody else wants one, too,” she said. <\/p>\n
One of her clients, Matthew Meyers, said he was surprised by prices in Toledo as he prepared to move back to his hometown from Columbus, Ohio. He spent about three months looking. <\/p>\n
“You had to move really fast,” he said of the market in Toledo. He originally offered $315,000 for a house listed at $305,000. After the house was appraised at $299,000, he and the seller negotiated the price to $305,000. <\/p>\n
In St. Louis, millennials are competing for the limited number of properties that are for sale, said Sam Hall, president of the local board of Realtors. They’re often looking in suburbs like Maplewood, where many houses have a restored, historic farmhouse vibe. <\/p>\n
“In most communities where millennials go to buy in St. Louis, what would have been a $200,000 to $300,000 house three to five years ago is now a $300,000 to $400,000 house,” Hall said. <\/p>\n
–With assistance from Adrienne Tong. <\/p>\n
Most Read from Bloomberg Businessweek <\/p>\n
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