Is It Harder to Buy a Home Today Than in the 1980s?

Few periods have been as expensive to buy a home as the 1980s, when sky-high mortgage rates nearing 19% made home loans feel insurmountable. Today’s home market echoes the 1980s for many — fueled by the pandemic recovery efforts, 2024 buyers are grappling with surging home prices and the highest interest rates in over two decades.

To gain insight into the evolution of housing affordability, MoneyGeek compared housing, income and inflation data for all 50 U.S. states between 1980 and 2023. We found that the house price-to-income ratio nearly doubled between 1980 (2.5) and 2023 (4.4), highlighting decreased affordability. However, the percentage of income spent on housing costs increased at a slower pace, from 23% in 1980 to nearly 29% in 2023, partly due to lower inflation and interest rates during both periods.

So, is it harder to buy a home today than in the 1980s? The general answer is yes, but it's not universal — local home prices, mortgage rates, infrastructure and income trends vary, and individual circumstances add complexity to the picture.

Homebuyers in the 1980s faced some of the highest mortgage rates in U.S. history, peaking at 18.6% in October 1981 as the Federal Reserve sought to combat inflation​. This led to a steep decline in home sales — nearly 50% between 1978 and 1982 — as high borrowing costs made homeownership unattainable for many. Cuts in federal housing programs also limited new construction, compounding the lack of affordable housing.

Although mortgage rates are much lower today (at 6.8% in 2023), the 2020s market presents its own challenges​. Buyers now face historically high home prices and inventory shortages, making the cost of homeownership similarly tricky to manage. Though the dynamics differ, both periods reflect significant affordability challenges due to economic pressures.

A house price-to-income ratio compares the median home value to the median household income, revealing how affordable housing is relative to earnings. The higher the ratio number, the more unaffordable the housing environment. Nationally, this ratio increased from 2.5 in 1980 to 4.4 in 2023.

Hawaii and California — with the highest house price-to-income ratios at 8.9 and 7.6, respectively — remain the least affordable states for homebuying today. Over the last 43 years, the gap between housing prices and income has widened most in these two states. Nine states, including Massachusetts and Idaho, have more than doubled their ratios since 1980. In contrast, West Virginia and North Dakota have seen only minor changes in housing affordability since 1980, with ratios averaging around 3.

The U.S. Department of Housing and Urban Development (HUD) considers residents spending more than 30% of their income on housing as housing-cost-burdened. The national average is about 29%, but 12 states exceed the 30% threshold.

California and New York residents face the highest burden today, spending roughly 36% of their income on housing, followed closely by Hawaii at 35%. In 1980, South Dakota led with 28%, with New York close behind at 27%.

Since 1980, Arizona and North Dakota have seen minimal changes in housing costs. Utah and Arkansas experienced modest increases, rising by just under 3%, while South Dakota recorded the largest decrease (-1%).

Today, Hawaii has the highest home cost per square foot at $744, followed by California and New York, both over $400. In 1980, Hawaii and California still carried the highest costs at $241 and $173 per square foot (in 2022 dollars), followed by Alaska ($156).

On the lower end, six states still have average home costs below $150 per square foot. West Virginia is the lowest at $120. West Virginia also exhibited the smallest increase ($41) since 1980, followed by North Dakota ($50) and Ohio ($55). These modest increases reflect a closer alignment between cost per square foot and house prices over time.

Today, the states leading in homeownership rates are West Virginia (77%), Delaware (76%) and Mississippi (76%). In 1980, Michigan and Idaho joined West Virginia at the top with rates of 73%, 72% and 74%, respectively.

Since 1980, Hawaii and Maryland have had the largest gains in homeownership at roughly 10%. The states with the sharpest declines are Arkansas (-5%) and North Dakota (-3%). In 14 states, homeownership was higher in 1980.

Income plays a crucial role in homebuying, with higher incomes helping families save for down payments and afford mortgages. As part of this analysis, we also explored income trends in all 50 states.

Calculated in today's dollars, the median household income in 1979 was often less than what Americans earn today. States like Minnesota and North Carolina now exceed their 1979 inflation-adjusted incomes by over $10,000, while Massachusetts and New Hampshire had the biggest increases.

Some states are exceptions to this general trend. For example, the adjusted 1979 median incomes for Alaska, Wyoming and Michigan were more than $10,000 higher than their 2023 levels.

Large gaps in income emerge when comparing 10-year percentage changes from 1969 to 1979 and 2013 to 2023. At a state level, the widest gaps occur in Wyoming, where the median household income increased by 149% from 1969 to 1979 but only grew 23% from 2013 to 2023 — a 126% drop. Louisiana experienced a similar decline, with growth falling from 133% to 32%.

MoneyGeek analyzed housing, income and inflation data from the U.S. Census and Bureau of Labor Statistics (BLS) for all 50 states to understand the homebuying environments in the 1980s and today. We compared across six categories:

Median home value. Data for 2023 comes from U.S. Census one-year American Community Survey (ACS), while data for 1980 comes from the Decennial Census of Population and Housing.

Median household income. Data for 2023 comes from the U.S. Census one-year American Community Survey (ACS), while data for 1979 comes from the U.S. Census Historical Income Tables. To compare 1979 to 2023, we adjusted the median household income in 1979 to 2023 dollars.

House price-to-income ratio. Measure of house affordability calculated by dividing the median home value by median household income. For the 1980 calculation, we adjusted the median household income in 1979 to 1980.

Housing costs as a percentage of monthly income. Monthly housing costs divided by monthly income. Housing cost data comes from the U.S. Census one-year American Community Survey (ACS) for 2023 and 1980 Census of Population and Housing for 1980, accessed through Google Books. Income data comes from the U.S. Census one-year American Community Survey (ACS) for 2023, while data for 1979 comes from the U.S. Census Historical Income Tables. We adjusted the median household income in 1979 to 1980 dollars for this calculation.

Cost per square foot. The 2022 data comes from American Home Shield. For 1980, we calculated the cost per square foot using the median home value in 1980 divided by the average square footage for a home in 1980, then adjusted the value to 2022 dollars using the Consumer Price Index (CPI) for comparison. The average square footage of a home in 1980 comes from 24/7 Wall St. and the value is 1,740 square feet.

Homeownership rate. Data for 2023 comes from the U.S. Census Housing Vacancies and Homeownership (CPS/HVS) survey while data for 1980 comes from the Decennial Census of Population and Housing.

10-Year Percentage Change in Median Household Income. Data comes from the U.S. Census one-year American Community Survey (ACS) for 2013 and 2023, while data for 1969 and 1979 comes from the U.S. Census Historical Income Tables.

We also used the following supplementary data to aid in our calculations:

Consumer Price Index (CPI). Data comes from the Bureau of Labor Statistics (BLS).

Below is the data that informed our analysis. We used housing costs, median household income and inflation rates as key indicators to compare homebuying conditions in the 1980s and early 2020s.