Home Price to Income Ratio

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Interpretation

Historically a house in the US cost around 3 to 4 times the median annual income. During the housing bubble of 2007 the ratio surpassed 5 - in other words, the median price for a single family home in the United States cost more than 5 times the US median annual household income. According to Mikey Maloney this ratio is heavily influenced by interest rates. When interest rates go down the affordability of a house goes up, so people spend more money on a house. Interest rates have now been falling since 1981 when they peaked at 15.32% (for a 10-year US treasury bond).

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