The views and opinions expressed in this post are solely those of the author and do not necessarily reflect the views of the Georgia Institute of Technology or the Georgia Board of Regents.
Last week, the Federal Reserve Bank of St. Louis released a report that showed empirically what everyone already knew…that homes are the least affordable they have ever been.
“In most U.S. counties, the cost of buying a home has pulled decisively away from what local incomes can support. Repeat-sales data show home values more than doubling since 2000 on average, with many places experiencing price growth well above 200%. Over the same period, real per-capita incomes rose only modestly…a regime where housing is structurally less affordable than it was a generation ago.”
This led me to wonder what the ratio of median home price to median household income is currently? During the inflation spike in 2022, when incomes weren’t growing at all, and prices of everything were soaring, the ratio rose above 5. As of January, it is down to 4.872 (on a 12-month moving average basis). Still historically high, and much higher than it was during the “housing bubble” that led to the financial crisis.