The Real Cost of Owning a Home in America

What if the way we measure housing affordability is fundamentally flawed? In this new working paper, Ian Kennedy and Norman G. Miller, PhD, Ernest W. Hahn Chair of Real Estate Finance, Emeritus, introduce a more comprehensive affordability index that reflects the true financial hurdles facing aspiring homeowners. Rather than relying solely on home prices and mortgage rates, the authors incorporate median renter incomes along with property taxes, insurance, utilities, and debt service, revealing a dramatically different picture of which U.S. metros are truly affordable. Their findings show that when full ownership costs are considered, more than 63% of metros require more than half of the typical renter’s income to purchase a median-priced home. By redefining affordability around the full financial burden of ownership, the paper reshapes the conversation about which housing markets are actually attainable.