How Much House the Middle Class Could Afford in the 90s Compared to Now

PeopleImages / Getty Images/iStockphoto

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

The 1990s was a time of economic growth, but it looked quite different for the middle class, especially in terms of buying and owning homes. If you compare house prices and the costs involved in owning a home from back then to today, the differences are very clear.

Housing Prices Then vs. Now

In the 1990s, the median home value in the U.S. was approximately $79,100. Adjusted for today’s economy, this would be significantly higher, but still pales in comparison to the current median home price of around $426,056. The gap widens further in high-cost areas like New York or San Francisco, where housing prices now reach well beyond the million-dollar mark.

Costs Beyond Purchase

In the 90s, additional homeownership costs like HOA fees, property taxes and maintenance were more aligned with middle-class incomes. Today, these expenses have significantly increased. For instance, homeowners now often pay between $200 and $300 per month in HOA fees alone, a substantial part of monthly housing expenses.

Wages and Affordability

While house prices have soared, wage growth hasn’t kept pace. The disparity between income and housing costs has widened, making it tougher for the modern middle-class family to afford a home compared to their counterparts in the 90s.

Mortgage Rates and Market Dynamics

The mortgage landscape has shifted significantly from the 90s to the present. Here are some key takeaways to know:

• In the 90s, the decade started with 30-year fixed mortgage rates at 9.83% and concluded around 8.06%.
• Comparatively, current mortgage rates exhibit a different pattern:
  • The average APR for a 30-year fixed-rate mortgage is approximately 7.25%.
  • For a 15-year fixed mortgage, the average APR is around 6.43%.
  • The 30-year fixed-rate jumbo mortgage stands at an average APR of 7.18%.

These current rates, while lower than the early 90s, contrast starkly with the lower house prices of that era, reflecting the evolving economic landscape and its impact on housing affordability.

Long-Term Investment Perspective

Despite the stark differences in affordability, homeownership remains a coveted goal. It’s seen not just as a place to live, but also as a long-term investment. The increase in property values over the years, despite being a barrier to entry, also signifies the potential long-term gains for homeowners.

Final Take

The journey to homeownership has undeniably changed from the 90s to now. The middle class today faces higher barriers to entry, primarily due to the steep rise in housing prices and associated costs. This comparison sheds light on the evolving economic landscape and the shifting challenges in achieving the dream of homeownership.

Information is accurate as of Jan. 19, 2024. 

Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.

Share This Article: