- Dax NollenbergerDax’s Data: Why Today’s Buyers Have It Tougher, Period
Sit at the dinner table during a family gathering, and the discussion of housing affordability is probably going to come up. Younger generations will likely complain about how much harder it is to buy a home, and a boomer is likely to respond with “when I bought my home, interest rates were (some double-digit number)”. Both parties with the intention of proving who had it harder. So, who is right? I intend to tell you… and put this argument to bed once and for all. There is a disclaimer that I’ll start with, I am of the former generation and default to the camp of *WE* as millennials and Gen Zers, have a much harder climb to accomplishing the American dream. That said, as with all my Dax’s Data deep dives, I’ll push my bias aside, generate a hypothesis, and let the data do the talking.
How this was analyzed
Before diving into the results of this analysis, I first need to explain what I did and how we arrived at a clear conclusion. The focus of today will be the National Data, so that I can arm said generation with the tools to bury this argument before it can ruin dinner. Analysis of Santa Cruz specifically will come in a follow-up blog that you can read HERE.
Data Source:
Data for Median Sales Price, Mortgage Rate Average, and Median Household Income were pulled from FRED.org. As much as I wish I could quash all then vs now arguments, the data needed to evaluate Affordability is only available in its entirety since 1984.
Important Metrics:
In order to measure who had it harder, we need to understand the cost of homes, how much households were making, and the interest rates at the time. Once we have that, we can calculate the Principal, Interest, & Taxes (Insurance note included). We then use 28% as a front-end Debt-to-Income ratio to calculate the required monthly income.
- Affordability Index: The Median Household Monthly Income for that year is compared to the Required Monthly Income to get a ratio called the Affordability Index. If that ratio is greater than 1, that means the majority of households can afford a typical single-family home. Below 1 means reduced affordability.
- Price-to-Income Multiple: This is a measure of how much higher home prices are relative to the median sales price. It’s a structural measure of housing cost relative to earnings, but not a measure of payment affordability. It shows how many years of income it would take to buy the median home if you spent every single dollar of income on it.
Caveats:
- 2025 data won’t be available deep into 2026, so estimates were made.
- FRED data used. Affordability results depend on the data source, and figures from NAR, FRED, or the Census can differ due to variations in methodology and definitions.
Data:
Findings:
So, who actually had it harder? The data is blunt. Millennials and Gen Z face a far steeper climb. Yes, buyers in the mid-80s dealt with brutal mortgage rates, and from an affordability-index standpoint, they were squeezed. But the argument falls apart the moment you compare home prices to income. By the Price-to-Income Multiple, today’s homes cost roughly forty percent more relative to what households earn than they did during the worst affordability years of the 80s.
That gap has widened for four decades. Nationally, the typical home now runs about five times the median household income, and in places like Santa Cruz, it can be closer to twelve. Income simply hasn’t kept pace with price growth.
Historically, lower mortgage rates helped offset high prices. But that relationship is breaking. Six percent was once considered a low rate that should lift affordability, yet today’s affordability index is nearly as strained as it was when rates were double. Prices are so elevated that even sizable drops in rates don’t restore balance.
That’s the real shift. Mortgage rates used to be a lever that could materially improve affordability. Now they barely move the needle. And it’s hard to imagine a world where rates return to historic highs because the market couldn’t withstand the hit.
Bottom line: younger buyers aren’t imagining it. The climb to homeownership is materially steeper today than it was for prior generations.
So next time someone says, “rates were double digits when I bought,” Remind them that homes cost nearly 40 percent more relative to income than they did during the worst of the double-digit interest-rate era. Rates didn’t break affordability; prices compared to income did.
Dax Nollenberger
📩 dax@sereno.com
📞 831-227-5847
