Five Years of Your Life

The price-to-income ratio measures how many years of gross median household income it takes to buy the median-priced home. A ratio of 3.0 means three years of income buys a house outright; a ratio of 5.0 means five years. It is perhaps the simplest, most revealing metric of housing affordability — and its trajectory over six decades is striking.

In 1960, the Census recorded a median home value of $11,900 against a median family income of $5,620, producing a ratio of 2.12. The conventional wisdom in real estate has long held that a ratio around 2.5–3.0 is "healthy." The national ratio hasn't been in that range in over two decades.

Why two lines?

The gap between the two series reflects methodology, not contradiction. The Census series uses the assessed value of the entire housing stock — including older, smaller, and rural homes — divided by median family income (which is higher than household income because it excludes single-person households). The FRED/MSPUS series uses the sale price of newly constructed homes (which are larger and more expensive) divided by median household income. The Census ratio runs 1–2 points lower as a result, but both show the same post-2000 acceleration: Census climbed from 2.36 in 2000 to roughly 3.4 by 2020; MSPUS went from 4.0 to 6.3 over the same period.

The geography of unaffordability

National averages conceal a chasm. In 1969, the gap between America's most and least affordable major metros was 1.7 years of income. By 2024, that gap had ballooned to 8.9 years — a fivefold increase. The Demographia 2025 report provides the definitive metro-level picture.

The middle has hollowed out

In 2019, 59 of the 100 largest metros had ratios below 4.0, and 20 had ratios below 3.0. By 2024, only 25 metros remained below 4.0, and just 3 stayed below 3.0. The pandemic didn't just make expensive cities more expensive — it pushed previously affordable markets past the threshold.

What broke?

No single cause — but a set of reinforcing structural forces that have compounded over decades.

Chronic underbuilding. The US averaged 1.5 million new housing units per year from 1968–2000. After the 2008 crash, annual starts averaged only 950,000 through the 2010s. Zillow estimates the national deficit at 4.7 million units as of 2025.

Zoning as supply constraint. In most US cities, 75% or more of residential land is zoned for single-family homes only. The NAHB estimates 24% of a new home's price is attributable to regulatory costs. Cities that have reformed — Minneapolis, Houston — show measurably better outcomes.

Rates masked the problem, then unmasked it. From 1981's 18.6% mortgage rate to 2021's historic 2.5% low, falling rates kept payments affordable even as prices soared. When rates jumped to 7.8% in late 2023, the payment-to-income ratio spiked to modern records.

The lock-in effect. With 58% of outstanding mortgages carrying rates below 4%, homeowners face an average penalty of $55,000 for selling. An FHFA study found each percentage point of lock-in reduces selling probability by 18.1%, freezing roughly 1.33 million sales in 2023 alone.

Where from here

The ratio has plateaued near 5.0× after the 2022 peak. Most forecasters expect gradual improvement — not through price declines, but through a multi-year period where income growth modestly outpaces prices. Mortgage rates have eased to about 6.1% in early 2026.

But a return to the 3.0–3.5× ratios of the 1990s would require either a massive construction boom or a severe economic downturn. Neither appears imminent. The more likely trajectory is a prolonged plateau, with the chasm between San Jose at 12.1× and Pittsburgh at 3.2× persisting as America's defining geographic economic divide.