A real estate agent coordinates the closing process by managing communication, deadlines, inspections, and paperwork across every party involved in the transaction. This coordination role is
Are Houses Less Affordable Than They Were in Past Decades?
Dated: August 11 2021
Views: 321
Are Houses Less Affordable Than They Were in Past Decades?
There are many headlines about how housing affordability is declining. The headlines are correct: it’s less affordable to purchase a home today than it was a year ago. However, it’s important to give this trend context. Is it less expensive to buy a house today than it was in 2005? What about 1995? What happens if we go all the way back to 1985? Or even 1975?
Obviously, the price of a home has appreciated dramatically over the last 45 years. So have the prices of milk, bread, and just about every other consumable. Prices rise over time – we know it as inflation.
However, when we look at housing, price is just one component that makes up the monthly cost of the home. Another key factor is the mortgage rate at the time of purchase.
Let’s look back at the cost of a home over the last five decades and adjust it for inflation by converting that cost to 2021 dollars. Here’s the methodology for each data point of the table below:
- Mortgage Amount: Take the median sales price at the end of the second quarter of each year as reported by the Fed and assume that the buyer made a 10% down payment.
- Mortgage Rate: Look at the monthly 30-year fixed rate for June of that year as reported by Freddie Mac.
- P&I: Use a mortgage calculator to determine the monthly principal and interest on the loan.
- In 2021 Dollars: Use an inflation calculator to determine what each payment would be when adjusted for inflation. Green means the homes were less expensive than today. Red means they were more expensive.
As the chart shows, when adjusted for inflation, there were only two times in the last 45 years that it was less expensive to own a home than it is today.
- Last year: Prices saw strong appreciation over the last year and mortgage rates have remained relatively flat. Therefore, affordability weakened.
- 2010: Home values plummeted after the housing crash 15 years ago. One-third of all sales were distressed properties (foreclosures or short sales). They sold at major discounts and negatively impacted the value of surrounding homes – of course homes were more affordable then.
At every other point, even in 1975, it was more expensive to buy a home than it is today.
Bottom Line
If you want to buy a home, don’t let the headlines about affordability discourage you. You can’t get the deal your friend got last year, but you will get a better deal than your parents did 20 years ago and your grandparents did 40 years ago.
Galdamez Group
We bring a wealth of knowledge on local communities, current market conditions, and the home buying and selling process. We strive to provide exceptional service every step of the way, so we can provi....
Latest Blog Posts
What Does Real Estate Seasonality Mean for Buyers?Real estate seasonality is defined as the predictable annual cycle of fluctuations in buyer demand, home inventory, and prices that repeat at
Reston Homeowners Association: 2026 Resident GuideThe Reston Homeowners Association is the primary community organization governing property standards, amenities, and neighborhood rules for most
Work With a Buyer Agent Effectively in 2026A buyer's agent is defined as a licensed real estate professional who represents the buyer's legal and financial interests throughout the entire purchase
Copyright© 2026 REIN Inc. Information Deemed Reliable But Not Guaranteed. The listings data displayed on this medium comes in part from the Real Estate Information Network Inc.(REIN) and has been authorized by participating listing Broker Members of REIN for display. REIN's listings are based upon Data submitted by its Broker Members, and REIN therefore makes no representation or warranty regarding the accuracy of the Data. All users of REIN's listings database should confirm the accuracy of
All or a portion of the multiple listing information is provided by the Central Virginia Regional Multiple Listing Service, LLC, from a copyrighted compilation of listings. All CVR MLS information provided is deemed reliable but is not guaranteed accurate. The compilation of listings and each individual listing are ©2026 Central Virginia Regional Multiple Listing Service, LLC. All rights reserved.
All MLS listings are © 2026 Central Virginia Regional Multiple Listing Service, LLC. All
© BRIGHT, All Rights Reserved
