US Home Affordability

The data below quantifies national home affordability by using home prices, household income and rents to calculate price-to-income, price-to-rent and rent-to-mortgage payment ratios.¹ The maximum affordable loan amount for the median household income is also calculated.

The ratios below are expressed as either dollar ratios or index ratios. The FHFA and the National Association of Realtors publish median home price values which we can use to calculate a dollar ratio (e.g. median home price to median household income). There are also home price indexes which have longer histories and are more frequently updated that we can use to create an index ratio (e.g. home price index to median household income). The latter series must be expressed as an index.

Home Price-to-Income Ratios

As measured by the latest Realtor quarterly median sales price data and median household income, the price-to-income ratio for the US was 3.43 in September 2011. The FHFA price-to-income dollar ratio is a comparable series and has history back to 2000 as shown in the first chart. The index ratios in the second chart are from monthly data and have a longer history.

Home Price-to-Income Dollar Ratio: FHFA, Realtor

Home Price-to-Income Index Ratio: FHFA, Case-Shiller

Note: Index ratios set to 100 in January of 2000

Home Price-to-Income Ratio History

Date	FHFA (Dollar Ratio)	Realtor (Dollar Ratio)	FHFA (Index Ratio)	Case-Shiller (Index Ratio)
November 2011	—	—	113.7	116.1
October 2011	—	—	112.6	116.9
September 2011	—	3.43	113.4	117.7
August 2011	—	—	113.0	118.5
July 2011	—	—	113.3	118.9
June 2011	—	3.42	113.2	119.1
May 2011	—	—	112.6	119.2
April 2011	—	—	112.3	119.2
March 2011	—	3.21	111.9	118.6
February 2011	—	—	112.3	119.5
January 2011	—	—	114.0	119.9
December 2010	—	3.50	115.1	120.2
November 2010	—	—	115.8	120.5

Home Price-to-Rent Ratios

The Realtor price-to-rent ratio for the US was 18.34 in September 2011. The FHFA price-to-rent series shows a longer history for the ratio in the first chart. These rent ratios are calculated using adjusted median contract rent data from the Census ACS.² Price-to-rent index ratios are shown in the second chart and use OER as the rent measure.

Home Price-to-Rent Dollar Ratio: FHFA, Realtor

Home Price-to-Rent Index Ratio: FHFA, Case-Shiller

Note: Index ratios set to 100 in January of 2000

Home Price-to-Rent Ratio History

Date	FHFA (Dollar Ratio)	Realtor (Dollar Ratio)	FHFA (Index Ratio)	Case-Shiller (Index Ratio)
November 2011	—	—	100.4	102.5
October 2011	—	—	99.5	103.4
September 2011	—	18.34	100.5	104.3
August 2011	—	—	100.2	105.1
July 2011	—	—	100.7	105.7
June 2011	—	18.30	100.9	106.1
May 2011	—	—	100.5	106.3
April 2011	—	—	100.3	106.5
March 2011	—	17.17	100.0	106.0
February 2011	—	—	100.5	106.9
January 2011	—	—	102.2	107.4
December 2010	—	18.73	103.2	107.7
November 2010	—	—	104.0	108.2

Rent-to-Mortgage Payment Ratio

The rent to mortgage ratio is simply the adjusted rent divided by a 100% loan-to-value mortgage payment (i.e. a mortgage with no down payment). A value below 1.0 means that rent is less than the monthly mortgage payment when the loan value is the full price of the home. Unlike the price-to-rent or price-to-income ratios, the rent-to-mortgage payment ratio accounts for the cost of money by incorporating the mortgage payment based on current 30-year fixed rates. As of September 2011, the Realtor rent-to-mortgage payment ratio for the US is 0.94.

Rent-to-Mortgage Payment Dollar Ratio: FHFA, Realtor

Rent-to-Mortgage Payment History

Date	FHFA (Dollar Ratio)	Realtor (Dollar Ratio)
September 2011	—	0.94
June 2011	—	0.90
March 2011	—	0.92
December 2010	—	0.86
September 2010	—	0.89
June 2010	0.82	0.85
March 2010	0.82	0.83
December 2009	0.81	0.84
September 2009	0.79	0.82

Inferred Affordable Mortgage

This analysis of affordability backs out the amount a household could borrow given a monthly mortgage payment equal to 30% of the median household income with a 30 year fixed-rate loan. Traditionally, 30% of income is the maximum amount a homeowner could use towards a home loan. You can think of it as a first order estimate of the maximum amount a household could borrow to purchase a home. The values are not adjusted for inflation.

Inferred Affordable Mortgage

Inferred Affordable Mortgage History

Date	Inferred Mortgage
November 2011	$259,233
October 2011	$256,745
September 2011	$255,514
August 2011	$250,678
July 2011	$242,538
June 2011	$243,677
May 2011	$240,006
April 2011	$234,520
March 2011	$234,520
February 2011	$231,583
January 2011	$236,692
December 2010	$238,064
November 2010	$249,787