Why does a house cost so much more than it used to?

01 It isn't nostalgia — here's the actual measurement

Economists and housing researchers measure affordability with a simple ratio: median home price divided by median household income. It is a blunt instrument, but a useful one, because it strips out inflation, regional cost-of-living noise, and mortgage-rate swings, and just asks: relative to what a typical household brings home, how many years of income does a typical home cost?

The commonly cited affordability benchmark for that ratio is 2.6 — roughly two and a half years of household income buying a median home. As of the most recent nationwide data, the actual ratio stands at 5.08. Not one of the fifty largest metro areas in the country currently meets the 2.6 benchmark. Not one.

02 The 2.6 benchmark, and how far off the country sits

To see how unusual today's ratio is, it helps to look at where the ratio has actually sat over time, using consistent national data:

Two things stand out. First, the ratio has never been anywhere close to the 2.6 benchmark in the last several decades of available data — that number describes an ideal, not a lived reality most buyers have ever actually experienced. Second, and more importantly for how it feels right now: today's 5.08 is meaningfully worse than the ratio in 1980, 1990, or 2000, and only modestly improved from the 2022 peak of 5.83. The relief from that peak has been real but partial.

03 How we got here: prices and incomes since 1980

Since 1980, median home prices in the U.S. have risen roughly 551%. Median household incomes, over that same stretch, rose about 373%. Both numbers sound large in isolation. The gap between them is the entire story.

Run that gap forward and it becomes concrete: if household incomes had simply kept pace with home price growth since 1980, the median American household would earn approximately $115,224 today. The actual median is about $83,730. That's a gap of roughly $31,494 a year — income that would exist, and would make today's home prices feel roughly as affordable as they did to a household in 1980, if wage growth had simply tracked housing cost growth over the intervening decades. It didn't, and that shortfall is a large part of what separates “expensive” from “actually harder to reach than it used to be.”

04 The sharpest years: 2019 to 2024

The long-run trend explains the baseline gap. The last several years explain why it feels like it got dramatically worse recently, because it did. Between 2019 and 2024:

• Median home prices rose from about $321,500 to $420,300 — a 31% increase.
• Median household income rose from about $68,700 to $83,730 — a 22% increase.

A nine-point gap between price growth and income growth compressed into roughly five years is a fast move by historical standards, and it landed on top of a ratio that was already stretched. This is the period most directly responsible for the sense — especially among buyers who were watching the market but not yet ready to act — that the goalposts moved while they were saving.

05 Where it's worst, and where it isn't

National medians flatten enormous local variation. The price-to-income ratio in the most expensive coastal metros is more than triple the ratio in some Midwest and Rust Belt metros:

Even Pittsburgh's 3.07 — the most affordable major metro on this list — still sits above the 2.6 benchmark. But the difference between a 3.1 and an 11.7 ratio is the difference between a stretch and a near-impossibility on a typical local income, which is why geography does as much to determine “can I afford a home” as almost any personal financial decision. If relocation is even loosely on the table, it is one of the largest affordability levers that exists, well ahead of most budgeting adjustments.

06 What this actually means for how you plan

None of this is meant as a reason to give up on the math — it's a reason to plan against the real ratio instead of the one that would have applied a generation ago. A few practical shifts follow directly from these numbers:

Size your timeline to the real gap, not a guess

If the ratio in your metro sits well above the national 5.08, a savings plan built around an old rule of thumb (three years of saving, standard raises) will likely undershoot. Run your actual numbers — current prices, current rates, your real income trajectory — rather than anchoring on what a home “should” cost.

Treat geography as a lever, not a given

A move from a metro with an 8-plus ratio to one closer to 4 can do more for affordability than almost any amount of extra saving at the original location, especially for remote-capable work.

Model a realistic down payment, not a nostalgic one

The 20%-down norm assumed a ratio far closer to 3 or 4 than to 5. At today's ratios, a smaller down payment paired with mortgage insurance, or a longer saving runway, is simply the math — not a sign of poor planning.

The Calcubear calculator lets you plug in your actual local price point, a down payment you can realistically hit, and a snapshot year that reflects an honest timeline, so you're planning against your real ratio instead of an inherited assumption about what buying a home is supposed to feel like.