History of U.S. homeownership: how housing has changed since 1960

The United States looked different in the 1960s, a time of visionaries, idealists, and growing prosperity. Rapid changes in technology have re-shaped much of American life, including how we socialize, work, and travel.  

Many significant changes in the lives of Americans since 1960 involve the home: Where we live, how we live and who we live with are all very different now than they were 60 years ago. 

For example, while rural areas of the United States have maintained roughly the same population (54 million in 1960 and 57 million in 2020), urban areas have gained nearly 150 million inhabitants in the last six decades. 

As experts in the world of home insurance, we wanted to dig deeper into the ways that housing has affected the lives of Americans both historically and in the present. Using U.S. Census Bureau data, we explored how housing has changed for Americans since 1960. 

Some of our key findings include: 

• Homes have become less affordable: In 1960, approximately 68 out of 100 Americans could afford a home, but now only around 43 out of 100 can afford one.
• Homeownership disparity has increased slightly: In the last 60 years, the homeownership gap between white and Black Americans has widened slightly from 26% to 29.4%.
• Single-person households are more common: The number of Americans living alone has increased dramatically, from 6.4% to 23%.

An increasingly unaffordable dream of homeownership

The United States is in the midst of a housing crisis. In fact, U.S. housing policy experts recently reported a series of concerning statistics related to housing in the midst of the coronavirus pandemic:

• 40 million renters are currently at risk of eviction.
• 3 million homeowners will have delinquent mortgages in 2021. 
• 43% of renters and 5% of homeowners are in serious danger of losing their homes. 
• Communities of color are disproportionately affected by issues of housing security, with Black and Latinx individuals making up 80% of those facing eviction.

These trends are the latest and most pressing developments in a long-developing affordability crisis.

Comparing housing affordability between 1960 and 2019

Even before the COVID-19 pandemic, housing was becoming less affordable. One common measure of housing affordability is the “price-to-income ratio,” or, in other words, the relationship between the median cost of a home and the median income. According to Rice University, a ratio of three to one is a desirable upper limit. For example, a median home costing $150,000 and a median income of $50,000 would represent a relatively affordable situation. 

Using data from the U.S. Census Bureau, we were able to calculate the price-to-income ratio for Americans in 1960 as well as 2019. 

• In 1960, the median home cost $11,900, while the median income was $5,600, indicating a price-to-income ratio of 2.1. 
• By contrast, in 2019 the median home cost $240,500 with an estimated median income of $68,703, a price-to-income ratio of 3.5. 

Simply put, housing is significantly less affordable for Americans now than it was 60 years ago.

Housing costs have far exceeded growth in wages

The cost of housing has risen much more quickly than wages in the past 60 years. Adjusting for inflation, we were able to compare the growth in wages and housing costs.

• The median house of 1960 would cost just $104,619 in 2020 dollars, far below the actual cost of $240,500, meaning housing costs have increased by 129%.
• Median household income has only grown by 39% in that same time period, from $49,232 (2020 dollars) in 1960 to $68,703 today. 

Black Americans face an even greater challenge when it comes to housing affordability, as Black families earn an average of $29,000 less annually than white families, which would represent a price-to-income ratio of 6.1. Regardless of race, an enormous number of families are burdened by the costs of housing, and the National Low Income Housing Coalition reports that there is a shortage of more than 7 million units in order to create affordable housing in this country.

Overall, using a price-to-income ratio of three to one, an American would have to earn $3,966 in 1960, or $80,166 in 2019, to be able to afford a house. Using historical as well as current data on income from the U.S. Census Bureau, we found that while 68 out of 100 Americans could afford to buy a home in 1960, only 43 out of 100 Americans can afford to do so now.

Racial disparity has widened since 1960

Although housing affordability is a growing concern, the overall homeownership rate has increased in the last 60 years, from 61.9% in 1960 to 67.4% in 2020. Though this is an encouraging trend, homeownership rates have still not recovered from the high of 70% that they reached in 2004, prior to the financial collapse in 2008.

More notable, however, is the continued racial disparity in homeownership rates. While both white and Black Americans now have higher homeownership rates than they did in 1960, the gap between these two groups has widened, according to a report from the U.S. Department of Housing and Urban Development.

• In 1960, 64.4% of white Americans and 38.4% of Black Americans owned homes, a difference of 26 percentage points. 
  In 2020, 75.8% of white Americans and 46.4% of Black Americans owned homes, a difference of 29.4 percentage points. 

While the U.S. Census Bureau did not record data about homeownership for other races in 1960, homeownership rates in 2020 for Asian Americans (61%) and Hispanic Americans (50.9%) were both lower than rates for white Americans. 

Experts cite numerous factors for this disparity. For example, an Urban Institute report cites lower household income, less educational attainment and lower credit scores as possible explanations. The U.S. Department of Housing and Urban Development suggests that discrimination also plays a role, as non-white homebuyers are told about and shown fewer units during the purchase process.

Addressing the disparity in homeownership rates will require confronting all of these complex issues. Despite this discrepancy in homeownership, Generation Z accounts for the most racially diverse group of first-time homebuyers.

More single women own homes

One notable trend in homeownership rates involves young, single female homeowners, a group that was virtually nonexistent in 1960. Less than 0.1% of women ages 18–34 lived alone in their own homes 60 years ago, but that same group now represents 1% of all homeowners in the United States.

Living alone is more common among all Americans

Exploring the tenfold growth of young, single female homeowners reveals a vast number of changes in the living arrangements among Americans in the last 60 years.

Consider, for example, the fact that just 6.4% of Americans lived alone in 1960, whereas 28.3% of Americans now live alone. Those living alone include both younger people, many of whom are waiting longer to get married, as well as older individuals with life expectancies that far exceed those of their parents and often those of their partners. With this rise in solo households, the average household size has decreased from 3.29 persons in 1960 to 2.63 persons in 2019.

Fewer Americans live with spouses

Significantly fewer Americans live with spouses now than they did in 1960. Specifically, more than 70% of Americans lived with a spouse in 1960, but today that group comprises only 51.5% of adults. By contrast, many more Americans now live as unmarried partners — 7.3% in 2020 compared to only 0.4% 60 years ago.

More than half of all young Americans now live at home

Younger people live much differently than they did in the sixties, with many more people living at home now. 

• Among 18 to 34 year olds, nearly twice as many people live at home with their parents in 2020 than in 1960.
• 22% of 18-34 year old men live at home now as opposed to just 10.9% in 1960. 

The COVID-19 pandemic has accelerated this trend among 18 to 34 year olds, 52% of whom now live with their parents. Of course, the issues with housing affordability and stagnant wages that we discussed above likely contribute to this trend as well.

Older Americans live alone rather than with family

Living arrangements have also changed substantially for older Americans, who now frequently live alone as opposed to with their families.

• In 1960, 20% of men and 40% of women over age 75 lived with their families.
• In 2020, just 6% of men and 19% of women over 75 live with their families.
• Nowadays, one out of every two older American women live alone, and 4.5% of all Americans over 65 live in nursing homes or other similar facilities. 

Finding suitable housing for seniors is of growing importance, as Americans over age 65 now make up 16% of the population in 2020—that group represented just 8% of the population in 1960. 

Facing the housing challenges of today

While some of the changes of the last 60 years are just that — changes — others are indicative of growing wealth inequality. While the incomes of the top 5% of Americans have increased faster than any other group in the last 30 years, 75% of the lowest earners spend more than half their paychecks on housing each month. 

Still persistent is a racial disparity in housing, a situation that exists despite the passage of the Fair Housing Act in 1968. A report by the Urban Institute found that the racial wealth gap is almost entirely dependent on the racial housing gap, so fair housing policy could go a long way toward a more equitable society. 

Another challenge with respect to housing involves those who have no housing at all: On any given night, more than 500,000 people have no home, including 35,000 youth. In the 1960s, experts predicted the end of homelessness by the 1970s, but now 17 out of every 10,000 people are now homeless, many without proper resources for mental health or substance abuse issues. 

With growing housing issues related to affordability, foreclosure, eviction, racial disparity and homelessness, the coming years represent a formidable challenge for politicians and community leaders hoping to provide stable lives for Americans. 

Methodology

Using data from the U.S. Census Bureau, we found information about household characteristics — including demographics, income, and living arrangements — to compare the United States in 1960 and 2020. When necessary, we used an inflation calculator to make comparisons about relative prices. When considering “affordability” in housing, we used a well-recognized metric called “price-to-income ratio,” which is calculated as follows: 

Median Household Cost / Median Household Income

In our research, we found that a price-to-income ratio of three to one was considered a reasonable upper limit for affordability.