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Over the last few years, the rising cost of everyday essentials, like eggs and milk, has been exacerbating financial pressures for the average American. But while grocery prices typically grab headlines, they’re nothing compared to the cost of what takes up the largest share of most budgets: housing.
According to the latest consumer expenditure report from the U.S. Bureau of Labor Statistics, housing accounts for 32.9% of the average annual expenditure, totaling $25,436, while food accounts for 12.9%, or $9,985. Combined, housing and food expenses represent nearly half of the average annual expenditures. This gave us food for thought: how does the growth in home prices compare to the rise in grocery costs? Are these two essential expenses climbing at a similar pace?
To find out, Zoocasa analyzed the price growth of 25 grocery items and the median price of single-family homes in 25 of the largest metropolitan statistical areas over ten years, from 2014 to 2024. We also calculated the average monthly mortgage payment in each metropolitan area to see how the rise in monthly mortgage payments compares to the rise in grocery expenses.
Home Price Growth Far Outpaces Grocery Cost Increases
From 2014 to 2024, the average rate of increase over ten years for 25 selected grocery prices was 27.9%, while the average rate of increase for the median price of single-family homes in 25 metropolitan areas was 100.1%. The home price gains represent two or even three times the increases that most grocery items experienced.
Tampa’s median home price increased the most at 182.8%, jumping from $145,000 in 2014 to $410,000 in 2024. Orlando, Phoenix, and Miami follow with price jumps of 145.8%, 134.2% and 133.3% respectively. The metro with the lowest ten-year price increase was Washington, D.C. with home price growth of 65.1%, though this still outpaces price growth for all but one grocery item.
Egg Inflation: It’s No Yolk
For most common grocery items, the rise in price has been gradual, raising minimal concern by consumers. For instance, from 2014 to 2024, the average price of a pound of bananas rose by just 0.04¢, and for a gallon of whole milk, the price increased by 0.27¢. However, the price of eggs has risen so much that consumers are now paying nearly 75% more than they were in 2014.
In 2014, the price of a dozen large eggs was $1.95 and in 2024 the price was $3.37—a 72.7% increase. This means the ten-year price growth of a dozen large eggs exceeded the median single-family home price growth in San Antonio (72.3%), Houston (72.0%), Philadelphia (68.8%), Baltimore (66.8%), and Washington, D.C. (65.1%).
The price of a pound of sugar has also increased substantially from 2014 to 2024. In 2014, consumers were paying $0.62 per pound of sugar, while in 2024, they were paying 62.8% more. Potato chips and potatoes follow with similarly steep price increases of 50.6% and 49.2% respectively, though these are still over 10 percentage points lower than the metro area with the smallest growth in single-family home prices.
Despite housing costs increasing more substantially over the years than grocery costs, Americans are more concerned about the rising cost of food. A survey by the Pew Research Center reported that 72% of respondents are very concerned about the price of food and consumer goods, compared to 64% who responded that they are very concerned with the cost of housing. Similarly, the survey found that among those who say economic conditions are poor, high inflation (28%) and a high cost of living (21%) were the primary reasons. The high cost of food and groceries and the high cost of housing were tied at just 6%.
Mortgage Payments Soaring at 3x, 4x, 5x the Rate of Grocery Costs
Compared to the rate of increase for average monthly mortgage payments, grocery price increases look modest. Though consumers have certainly had to adjust their grocery budgets as inflation increased, rising monthly mortgage payments tightened household budgets even further.
Among the 25 analyzed single-family housing markets, six have seen their average monthly mortgage payments increase by over 200% in ten years. These include three Floridian cities: Tampa (284.1%), Orlando (234%), and Miami (216.9%). However, the metros with the most expensive mortgage payments are all in California, with San Francisco and San Diego having the highest average monthly mortgage payments in 2024 at $6,771 and $5,224 respectively.
Though inflation has cooled in 2024 compared to the previous three years, Americans are still struggling to afford basic living costs. A survey by the National True Cost of Living Coalition found that 65% of “middle-class” Americans (those earning more than 200% of the federal poverty level) are struggling financially today.
For aspiring homeowners, saving for a down payment while struggling to afford groceries may be challenging. However, those with the means to do so may consider investing in more affordable property types, such as condos or townhomes, and exploring cities with lower costs of living to get into the market at a lower cost and start building equity for the future.
Housing and Food Expenditures Increase at Similar Rates
While rising home prices and mortgage costs are undoubtedly impacting affordability for Americans, average expenses in all categories are rising, with some at even faster rates than housing.
The amount of money people spend on personal insurance and pensions has increased from $5,528 in 2013 to $9,556 in 2023, representing a 72.9% increase. People are also spending significantly more on healthcare, with average annual expenditures rising by 69.6%.
Money spent on food at home and food away from home has increased by 52.2% and 49.8%, respectively, which is just slightly higher than the increase in spending on housing, which rose by 48.3%.
As expenses rise across the country, Americans may need to look outside of high-priced metros to find affordable home prices and lower costs of living. RentCafe recently analyzed 139 U.S. metros to find the most ideal living locations based on socioeconomics, quality of life, and location and community, finding that Portland, ME, Lincoln, NE, and Des Moines, IA rank as the top three most livable metros. The median single-family home prices in Lincoln ($303,400) and Des Moines ($304,900) are also well below the national median of $418,700, providing aspiring homebuyers a more affordable entry point into the housing market.
Thinking of moving next year? From closing costs to property taxes, our real estate agents are here to help you on your exciting homebuying journey. Give us a call today!
The post The Battle of Inflation: Are Groceries or Home Costs Rising Faster in the U.S.? appeared first on Zoocasa Blog.
