House Prices Outpaced Income Growth Over the Past 40 Years

As a home inspector, I’ve walked through numerous houses—new builds, historic charmers, fixer-uppers, and everything in between. Over the years, I’ve watched the American housing landscape change, but one trend has become glaringly clear: homes are no longer just places to live—they’ve become symbols of economic tension. What used to be a reasonable dream for middle-income families is now, for many, a distant and increasingly expensive aspiration.

A recent chart from Statista confirmed what those of us in the industry have long suspected. From 1985 to 2023, median home prices in the U.S. increased by 408%, while median household income rose only 241%. In simpler terms, in 1985, it took 3.6 times the median income to buy a home. By 2023, that figure had ballooned to 5.3 times. That growing gap isn’t just a number—it’s real-life pressure for families trying to put down roots. Let’s take a deeper look at how we got here and what it means for homeowners, buyers, and anyone who cares about the future of housing in America.

The Long Climb: From Affordable to Aspirational

When I purchased my first homes in the 1980s, buyers often brought modest expectations and realistic budgets. The median home cost $84,300, and median income was around $23,620. Sure, money was tighter, but owning a home was still within reach for the average family—especially with mortgage rates gradually declining from their record-high double digits in the early ’80s.

Fast forward to 2023, and the story looks very different. That same average family now brings in $80,610 a year, while the median new home costs $428,600. It’s not just sticker shock—it’s the culmination of four decades where home price growth has far outpaced income growth. As a home inspector, I see this reflected in the kinds of clients I serve. First-time buyers are older. They often need co-signers. And many settle for less than ideal homes because it’s all they can afford—if they can afford anything at all.

The Pandemic Acceleration: A Perfect Storm

Housing prices had already been outpacing wages for years, but COVID-19 threw gasoline on the fire. As lockdowns gripped the country in 2020, something strange happened in the real estate market. Interest rates dropped to near-zero as the Federal Reserve moved to stimulate the economy. Stimulus checks and pandemic savings gave Americans unexpected financial flexibility. With more people working from home and reevaluating their lifestyles, demand for houses exploded.

But there was a catch—supply couldn’t keep up. Construction slowed due to labor shortages and material delays. Sellers, uncertain about the economy and hesitant to let strangers walk through their homes during a health crisis, chose to sit tight. As a result, the demand-supply imbalance sent prices soaring.

I saw homes selling sight-unseen. I saw buyers waiving inspections and appraisals. In the rush to buy, rational decision-making often took a back seat. The frenzy was good for sellers and short-term profits, but it also locked out a generation of buyers. Even now, I encounter clients still trying to recover from bidding wars they lost two years ago—or worse, nursing regrets from purchases made too hastily.

The Fed’s Response: Cooling Off at a Cost

When inflation surged in 2021–2022, the Federal Reserve changed course. Interest rates climbed rapidly in an attempt to bring prices down. Mortgage rates more than doubled in many cases, making already expensive homes even less accessible. While home prices have cooled slightly in some regions, the combination of high prices and high borrowing costs means affordability remains at a crisis point.

As a home inspector, I’ve noticed fewer transactions in some markets—not because people don’t want to move, but because they feel stuck. Homeowners with 2.75% mortgage rates don’t want to trade up to 7% mortgages. Buyers on the sidelines are waiting for prices or rates—or both—to drop. But time keeps ticking, and for many, the dream of homeownership is slipping further away.

Real Consequences on Real People

It’s easy to talk numbers and ratios, but let’s put a face to this crisis. I recently inspected a modest three-bedroom ranch built in the 1970s—good bones, outdated kitchen, needed a roof. The list price was $355,000. The couple buying it were both in their mid-30s, each with steady jobs. Even with 10% down and solid credit, their monthly payment (including taxes and insurance) would push $2,500. Thirty years ago, that same house would have cost them less than $100,000.

This isn’t just a math problem—it’s a life planning issue. When housing eats up more than a third of your income, there’s less for savings, emergencies, and retirement. It delays marriage, family planning, and relocation for better jobs. And it can create long-term disparities in wealth accumulation since home equity has traditionally been one of the most reliable ways to build financial security.

What This Means for the Market—and for Inspectors Like Me

From my vantage point, this affordability crunch has reshaped the inspection landscape too. More buyers are stretching their budgets and entering the market with little to spare for repairs or upgrades. As an inspector, this puts pressure on me to be even more thorough and realistic in my reports. My findings may influence whether a buyer can afford the home—not just the purchase, but the cost of making it safe and livable.

We’ve also seen a rise in “as-is” sales, especially during the pandemic spike, where sellers accept no repair responsibilities. This makes the home inspection even more crucial. A leaky roof, old HVAC system, or signs of foundation settling can mean tens of thousands in future costs—something a buyer already at the edge of affordability simply can’t handle.

The Hidden Costs of Deferred Maintenance

Here’s another pattern I’ve noticed: when homeowners are stretched thin financially, they tend to delay maintenance. Understandably so—but it can come back to bite them when it’s time to sell. I often walk into homes with aging systems, patchwork repairs, and decades of neglect. These issues can derail a sale or require steep price reductions to move forward.

What I recommend to homeowners (especially those not planning to move soon) is to approach maintenance with the same discipline they apply to mortgage payments. A roof that’s patched rather than replaced might save a few bucks today, but it could scare off buyers tomorrow. Keeping up with the health of your home isn’t just smart—it’s essential in a market where margins are tight and buyers are cautious.

Tips for Buyers Navigating Today’s Market

For buyers wondering how to survive (and thrive) in this market, here are a few practical insights from someone who’s seen a lot of deals—good and bad:

1. Don’t skip the inspection. No matter how hot the market, never waive your right to know what you’re buying. Surprises are expensive.

2. Budget beyond the sale price. Include repair estimates, closing costs, and moving expenses in your calculations.

3. Think long-term. Even if you overpay slightly today, will the neighborhood, schools, and local economy support future value growth?

4. Stay realistic. You may not get your dream house on the first try. Focus on safe, solid properties you can improve over time.

5. Get pre-approved, not just pre-qualified. In this competitive landscape, preparation is power.

What Policymakers and Builders Need to Hear

It’s not just individual buyers who need to adapt—the broader system does too. Builders must find ways to increase inventory, especially for entry-level homes. Zoning regulations, material costs, and labor shortages all play a role, but if we don’t address supply, prices will continue to climb beyond what the average household can handle.

Policymakers should consider tax incentives for first-time buyers, targeted subsidies, and initiatives to promote affordable housing development. The market won’t correct on its own without intervention, especially when wages continue to trail housing costs.

Looking Ahead: Will the Gap Close?

There’s no silver bullet. Some experts predict a market correction, while others believe current prices are the new normal. Either way, the fundamental mismatch between income growth and home price appreciation remains a challenge that won’t disappear overnight.

As a home inspector, I believe that transparency, education, and preparation are the best tools buyers can carry. Understanding what a home truly costs—not just to buy, but to own—is key to making smart decisions in a complex housing market.

Final Thoughts: A House Is Still a Home

Despite all the stress and numbers, we should remember that a house is more than a financial instrument—it’s a place of safety, family, and belonging. That’s why the affordability crisis matters so deeply. It’s not just about economics—it’s about who gets to put down roots and build a life.

Whether you’re buying, selling, or staying put, your home deserves care and attention. And as inspectors, we’ll keep doing our part—one attic, one foundation, one crawlspace at a time—to help people make informed, confident choices.

Interested in learning more about preparing your home for inspection or navigating today’s real estate challenges? Visit us at West Egg Inspections and Home Services for tools, tips, and local insights that help you stay one step ahead in any market.