U.S. home prices have increased significantly faster than household incomes over the past four decades. According to a new analysis from Clever Real Estate and Best Interest Financial, home prices have risen 551% since 1980, compared to income growth of 373% over the same period.
That divergence has pushed the national price-to-income ratio to approximately 5.08, nearly double the level of about 2.6 that is widely considered affordable.
As of 2024, the median U.S. home value is about $412,000, while the median household income is just over $81,000, according to the report.
The analysis also estimates that if income had kept pace with home price growth, the median household income would be closer to $115,000 today.
The gap has widened further in recent years. Since 2019, home prices have risen at more than twice the pace of income growth, accelerating the affordability divide during and after the pandemic-era housing boom.
The report also points to the growing burden on buyers relative to income. In many markets, home prices now exceed five times median household income, a level that has become increasingly common across the country.
At the same time, higher home values have increased the cash required to purchase a home, with larger down payments needed relative to income. The report notes this dynamic has made entry into homeownership more difficult, particularly for first-time buyers.
While rising home prices have contributed to higher levels of homeowner equity, the imbalance between price growth and income gains continues to expand rather than narrow.
What It Means For LOs
The widening gap between home prices and income is contributing to higher qualification thresholds, particularly as borrowers must support larger loan amounts relative to earnings.
As a result, borrowers are increasingly relying on layered financing approaches — including down payment assistance, seller concessions, and alternative loan structures — to meet affordability constraints.
At the same time, elevated home values continue to support home equity lending opportunities, even as entry-level affordability remains constrained.
