The price-to-income ratio (PIR) is the simplest, most intuitive measure of housing affordability: the median home price divided by the median household income. It answers the question: how many years of gross income does it take to buy the median home?
The Formula
Price-to-Income Ratio = Median Home Price / Median Household Income
Example: Austin TX
PIR = $475,000 / $82,000 = 5.8x
Example: Memphis TN
PIR = $195,000 / $52,000 = 3.75x
Historical Context
The long-run average PIR in the US was 3–4x from the 1970s through 2000. The 2000s bubble pushed it to 5x nationally before the 2008 correction. Post-pandemic, the national PIR has reached 5.5–6x — near historical highs — driven by rate suppression and supply shortages.
PIR Benchmarks
| PIR | Affordability Level | Typical Markets |
|---|---|---|
| < 3x | Very Affordable | Rural areas, declining markets |
| 3–4x | Affordable | Pittsburgh, Cleveland, Memphis |
| 4–5x | Moderately Affordable | Indianapolis, Columbus, Kansas City |
| 5–7x | Stretched | Nashville, Atlanta, Dallas, Austin |
| 7–10x | Severely Unaffordable | Seattle, Boston, Denver |
| > 10x | Crisis Level | SF, LA, Honolulu, NYC |