Hours Worked to Buy a Home
Median home price divided by median hourly wage (total hours needed)
“Workers must work far more hours to afford a home than before 1971.”
The number of hours a median worker must work to buy a median home has increased from ~5,700 hours in 1960 to ~15,700 hours in 2023. This nearly tripled, with the sharpest increases coming in the 2000s housing bubble and the post-2020 surge. The divergence reflects both rising home prices and stagnating real wages.
Perspectives
← Swipe between perspectives →
Supply constraints, wage stagnation, and monetary policy all contribute
The tripling of hours needed to buy a home reflects insufficient housing construction, stagnant real wages, and low interest rates that inflated prices.
This chart captures a genuinely alarming trend. A median worker now must work nearly 3x as long to buy a median home as in 1960. The causes are multi-factorial: zoning laws restrict supply, wages haven't kept pace, and low rates inflated prices. Monetary policy is one piece, but housing policy is the bigger lever.
Causal Factors
Housing supply constraints
30%Restrictive zoning, NIMBYism, and land use regulations limit new housing construction in high-demand areas, driving up prices.
Stagnating median wages
25%Median hourly wages grew only ~15% in real terms from 1970-2023, while home prices tripled. The numerator grows faster than the denominator.
Low interest rates inflating prices
20%Low mortgage rates increased buying power, but pushed up prices as more money chased limited housing. The 2020-2021 near-zero rates sent prices to records.
Investor & institutional buying
15%Institutional investors, REITs, and foreign buyers increased demand for housing as an investment asset, competing with first-time homebuyers.
Construction cost increases
10%Labor shortages, material costs (lumber, concrete), and regulatory compliance increased the cost of building new homes.
Data Source
Census Bureau (Median Home Price), BLS (Average Hourly Earnings), FRED (MSPUS, AHETPI)
View original dataLast updated: 2024-12
Key Events
Nixon Shock
Dollar decoupled from gold; housing affordability begins deteriorating
Volcker rates
High interest rates temporarily suppress home prices but increase monthly costs
Housing bubble peak
Subprime lending pushes prices to unsustainable levels
Post-crash low
Housing affordability briefly improves after the bubble bursts
New affordability crisis
Post-pandemic price surge and rising rates create worst affordability in decades