Choose two years to compare mortgage affordability
Key mortgage affordability insights
Most Affordable Period
1987
~4.2x income ratio
2006 Bubble Peak
6.22x
Pre-financial crisis high
Current (2024)
6.80x
Worst affordability on record
This calculator helps you understand how home prices have changed relative to household incomes over the past several decades, revealing long-term trends in housing affordability and mortgage qualification requirements.
Data Sources:
Historical context and economic analysis
# Understanding Mortgage Affordability
Mortgage affordability has become one of the most pressing economic issues of our time. This calculator helps you understand how mortgage costs have changed relative to income over the past several decades.
The price-to-income ratio is a key metric for understanding mortgage affordability. It represents how many years of median household income it would take to purchase a median-priced home with a mortgage. Historically, a ratio of 3-4x has been considered affordable, while ratios above 5x indicate mortgage stress.
During the 1990s, mortgages were relatively affordable with price-to-income ratios around 3.5-4x. This period represented a healthy mortgage market where homeownership was accessible to middle-class families.
The mid-2000s saw an unprecedented mortgage bubble, with price-to-income ratios reaching 5.3x by 2006. This unsustainable growth was fueled by loose lending standards and speculation, ultimately leading to the 2008 financial crisis.
Following the housing crash, mortgage affordability improved significantly. By 2012, ratios had fallen back to more sustainable levels around 4.8x, creating opportunities for buyers who had been priced out during the bubble.
The COVID-19 pandemic triggered another mortgage boom, driven by low interest rates, remote work, and limited supply. By 2022, price-to-income ratios had surged to 5.75x, exceeding even the 2006 bubble peak in many markets.
Mortgage affordability affects:
- Homeownership rates: Higher ratios make it harder for first-time buyers to enter the market
- Economic mobility: Mortgage costs consume a larger share of household budgets
- Wealth inequality: Those who already own homes benefit from appreciation, while renters fall further behind
- Geographic mobility: High mortgage costs in job-rich areas limit where people can afford to live
This calculator uses official data from:
- Case-Shiller U.S. National Home Price Index: The most widely-followed measure of U.S. home prices
- Federal Reserve Economic Data (FRED): Median household income statistics
- Historical records: Dating back to 1987 for comprehensive trend analysis
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