Housing Affordability in the United States: Price-to-Income Ratio by Pareto Distribution

Abstract

This study integrates the price-to-income ratio (PIR) with Pareto distribution characteristics to provide a novel approach for evaluating home affordability across U.S. counties. The methodology offers a new lens for the analysis of home affordability by capturing both the extreme values and central tendencies of PIR. The study normalizes the resulting Pareto parameters to a common scale and integrates data from the Zillow Home Value Index and the U.S. Department of Commerce’s SAIPE program to create a single affordability index. The findings point to significant regional differences: coastal and urban regions, such as California and New York, face significant affordability challenges, whereas the Midwest, especially Kansas, has higher affordability. The results highlight the significance of targeted policy interventions and are consistent with the body of research on systemic risk and housing market dynamics. This study also opens new avenues for future research, including the impact of economic factors on affordability and cross-regional comparative studies. The suggested approach encourages more equitable access to housing by providing policymakers with a useful tool to track and manage challenges related to housing affordability. © 2025 by the author.