Renting vs. Buying: How 50 Years of Housing Data Changed the Math
Every generation believes housing was easier for the one before it. In this case, the data actually backs that up — clearly and by a wide margin. Comparing home prices, rents, and incomes since the mid-1970s shows an affordability gap that didn’t happen gradually so much as it compounded.
The affordability ratio has roughly doubled
In 1967, the median U.S. home cost $22,700 against median household income of $7,143 — a price-to-income ratio of about 3.2. By 2022, the median home price had reached $440,300 against estimated income of $75,200, pushing that ratio to roughly 6.0. Over that stretch, incomes rose 953%, while home prices surged 1,839% — nearly double the pace. A separate comparison using 1985 as the starting point tells the same story on a shorter timeline: the median home cost $82,800 against $23,620 in median income (a 3.5 ratio) in 1985, versus $416,900 against $83,150 in 2025 (a 5.0 ratio).
The 2022 peak was a genuine record. The Harvard Joint Center for Housing Studies found the national price-to-income ratio hit 5.6 that year, the highest on record dating back to the early 1970s, up sharply from just 4.1 as recently as 2019. Nationally, home prices rose 43% between 2019 and 2022 alone, while incomes grew just 7% over the same period.
Mortgage rates cut the other way
It isn’t all one-directional. The 30-year fixed mortgage rate fell from 12.4% in 1985 to roughly 6.8% in 2025, which meaningfully cushions the affordability picture even as sticker prices climbed. Lower borrowing costs during the 2010s and pandemic era, in particular, allowed buyers to bid up prices while keeping monthly payments relatively contained — until rates rose again and removed that cushion.
Renting hasn’t been the easier path either
The idea that renting sidesteps the affordability problem doesn’t hold up in the data. Median gross rent grew roughly 72% since the 1960s — more than double the growth rate of adjusted incomes over the same period. The 1970s specifically saw the fastest rent growth of any decade on record, with a compound annual growth rate of 8.45%. Renters gain flexibility but build no equity, meaning fifty years of rising rent has produced none of the offsetting asset growth that homeowners have captured.
The gap is now nearly universal geographically
This isn’t a coastal-market story. Treasury Department analysis found that from 2000 to 2020, median rents grew faster than median household income in 88% of U.S. counties, home to 97% of the population, and median home prices outpaced overall inflation in 88% of counties, covering 95% of the population. More than 90% of Americans now live somewhere where housing costs — whether rented or owned — have outrun income growth for two decades running.
What this means for financial planning conversations
Home equity now represents roughly 45% of the median homeowner’s net worth, meaning the rent-versus-buy decision isn’t just a monthly cash flow question anymore — it’s arguably the single largest driver of long-term wealth-building available to most households, and one that’s gotten structurally harder to access with each passing decade. For younger clients weighing the decision today against a 6x income multiple, versus parents or grandparents who bought at 3x, the conversation has to acknowledge that this isn’t the same market their family navigated, and the standard playbook may need real adjustment — longer saving horizons, different down payment strategies, or a more deliberate rent-and-invest approach where ownership isn’t realistic in the near term.