The Blubber

Homeownership Slips Further Out of Reach as Home Prices Outpace Income Growth

The American Dream of owning a home is becoming increasingly unattainable as home prices have skyrocketed far beyond income growth over the past two decades, according to a new study by Home Bay.

Even after the 2008 housing market crash, the median U.S. home price soared 162% between 2000 and 2022—the most recent year with full housing and income data.

Wages Lag Behind Soaring Home Prices

While low interest rates and limited housing inventory fueled a rapid recovery and continued price growth, household incomes have failed to keep pace.

• The median-priced home in the U.S. is now $433,100.
• To afford this, the average American household would need to earn $166,600 per year.
• However, the median household income is just $74,580—a mere 45% of the recommended amount.

Home Prices Are Growing at Double the Rate of Income

Using publicly available data from the Federal Reserve, the National Association of Realtors, and the U.S. Census, researchers found that the widening gap between home prices and income has pushed the house-price-to-income ratio far beyond healthy levels.

• Financial experts recommend a house-price-to-income ratio of 2.6, meaning a home should cost roughly 2.6 times an annual salary.
• Instead, the current nationwide ratio has ballooned to 5.8—more than double the healthy threshold.

Key Findings on Home Prices vs. Income Growth

• Home values have surged 162% since 2000, while income has only increased 78%.
• House prices have grown twice as fast as income since 1985 and 2.1 times faster since 2000.
• If home prices had risen at the same rate as income since 2000, the median U.S. home would cost about $294,000—roughly 32% less than today’s actual price of $433,100.

With rising costs and stagnant wages, homeownership remains increasingly out of reach for many Americans.