Most Expensive Time to Buy?

Ask anyone and they’ll probably say that this exact time in history is the most expensive time to buy a home in America. It might sound like hyperbole but at the same time, rates and prices are high enough to give people pause and cause them to ask, “but wait, is it?” Shockingly, that answer is… 

No. 

Is it the most expensive time in history in which to buy? Not really. According to Realtor.com, in May of 2023, the average buyer spent just under 33% of their household income on their mortgage. It’s not close to what buyers once paid… way back in 1981. 

That’s right. In order to examine the true most expensive time to buy in history we have to step back over 40 years. An economy deep in recession made for a housing market in which buyers were spending 51.3% of their household budget on their mortgage. And the kicker? That was *just* their mortgage payment. It didn’t include insurance, taxes, or utilities. 

To figure out how affordable buying a home has been over the past 50 years, the Realtor.com data team analyzed data going back to 1973. We looked at monthly existing single-family home prices from the National Association of Realtors®, weekly mortgage interest rates for 30-year fixed loans from Freddie Mac, and median annual household income from the U.S. Census Bureau. Then we calculated the typical mortgage payment of a buyer taking out a loan on the median-priced home and what percentage of their household income that would eat up.

Looming economic downturns, though, might make for a more affordable market. When the country climbed out of the Great Recession, rates were below 4% and buyers were spending under 15% of their income on homes. This same thing happened again in the early days of the pandemic when people were quarantined at home. To stimulate the economy, the Fed cut interest rates and mortgage rates fell below 3%—for the first time ever which resulted in buyers spending just 18% of their monthly income. 

It might be *one of* the most expensive periods in history, but that doesn’t mean it will stay that way.