Construction of affordable ‘starter homes’ has decreased 75% since the 1970s.

Rising costs aren’t the only thing stopping first-time homebuyers from buying real estate—only 9% of recent new construction is for starter homes. The majority of new housing construction focuses on higher-end buyers due to the increased cost of land, labor, and resources. The rate at which starter homes are built has been on a steady decline since 1980, when they comprised 40 percent of new construction.

Jonathan Scott, Scott Brothers Global, stated that in another 20 years, “no young person will be able to afford to purchase a home. Period.”

Even after adjusting for inflation, US homebuyers are spending more than double to buy a home than they were in 1965, when the median home price was $20,200, according to U.S. Census data. In 2024 dollars, that works out to roughly $202,215, which is less than half of the $420,800 that a home costs today, per U.S. Census data.

The reason: According to the National Association of Homebuilders (as well as many other research studies), “On a dollar basis, applied to the current average price ($394,300) of a new home, regulation accounts for $93,870 of the final house price. Of this, $41,330 is attributable to regulation during development, $52,540 due to regulation during construction. In dollar terms, the NAHB studies show the cost of regulation continuing to rise between 2016 and 2021, although not as much as it did between 2011 and 2016.

Here’s how much the median home value in the U.S. has changed between 1965 and 2024:

* 1965: $20,200

* 1975: $38,100

* 1985: $82,800

* 1995: $130,000

* 2005: $232,500

* 2015: $289,200

* 2024: $420,800

Here are those values again, adjusted for inflation, in 2024 dollars:

* 1965: $202,215

* 1975: $228,404

* 1985: $245,129

* 1995: $270,147

* 2005: $380,793

* 2015: $386,494

* 2024: $420,800

In 1965, the median annual household income was $6,900, per U.S Census data. With homes selling for a median price of $20,200, a median earner would spend just under three times their income on a home.

In 2024, the median annual household income is estimated to be $78,171, according to data consulting firm Motio Research. That means that a typical homebuyer is spending 5.3 times their income on a home at today’s median price.

Even affording a down payment for a home can be a challenge for potential buyers with limited savings, especially those who are younger or saddled with student loan debt — or both.

Increasingly, only the wealthiest Americans can afford to own a home. To afford a median-priced home with a 20% payment in 2024, a buyer needs to earn a median income of $100,000 or more in all but 14 states, according to a recent Bankrate analysis.

In 2024, 74% of homebuyers took out a mortgage, according to data from “1440.com”. Debt owed on mortgages made up about 70% of US consumer debt as of 2025. In the 1980s, 30-year fixed mortgage rates peaked just under 17%. During the COVID-19 pandemic, they were much lower, hovering around 3%.

According to Reason Magazine, rents have surged faster than general inflation in recent years. “Nearly half of renter households now spend over 30% of their income on rent (and a quarter spend over 50%), a level of cost-burden that was once rare.” The author, Christos Makridis, explains that “A growing body of evidence links restrictive land-use regulations to higher housing costs and diminished supply.”

Zoning laws dictating lot sizes, height limits, lengthy permitting process and many, many other rules prevent new housing construction. minimum lot size requirements, height limits, lengthy permitting processes, and other rules can all slow down or outright prevent new housing construction in high-demand areas, thereby leading to higher house prices and growth in rental rates.

Reason Magazine points out that housing shortages is essentially a demand vs. supply issue. When more people compete for fixed housing stock, prices rise.

Some communities – such as Houston and Minneapolis — have backed off from restrictive zoning laws with “promising” results. “Increasing housing supply through deregulation has helped temper prices in several cases, without the negative fallout some feared.”

The Reason article notes that simply supplying subsidies to buyers usually pushes housing prices even higher – “enriching landlords and sellers more than the low-income families they aim to assist.”