A Key Housing Market Metric Hits Uncharted Territory

The nationwide house price-to-rent ratio has hit its highest level since 1975.

1 minute read

June 4, 2021, 7:00 AM PDT

By James Brasuell @CasualBrasuell


Home For Sale Signs

caswell_tom / Flickr

William R. Emmons, an economist at the Federal Reserve Bank of St. Louis, shares details of a key metric for explaining the current state of the housing market.

"The nationwide house price-to-rent ratio, a widely used measure of housing valuation that is analogous to the price-to-dividend ratio for the stock market, is at its highest level since at least 1975," writes Emmons.

"Rapid house price appreciation since last May, combined with a slowdown in rent growth, resulted in a surge in this ratio," explains Emmons for the combination of forces at work in the housing markets. "By February 2021, the national house price-to-rent ratio had surpassed the previous peak reached in January 2006; in March 2021, the ratio was 1% higher than its level at the peak of the housing bubble."

What does that all mean? According to Emmons, the imbalance in the house price-to-rent ratio suggests that the average house is selling for "quite a bit more" than its "fair value."

The article includes more details on the methodology for calculating the house price-to-rent ratio, an explanation of the "fair value" of a house, and a note about the difference between the current housing market and the conditions that led to the subprime meltdown and Great Recession of 2007 to 2009.

Monday, May 24, 2021 in Federal Reserve Bank of St. Louis

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Get top-rated, practical training

Close-up of "Apartment for rent" sign in red text on black background in front of blurred building

Trump Administration Could Effectively End Housing Voucher Program

Federal officials are eyeing major cuts to the Section 8 program that helps millions of low-income households pay rent.

April 21, 2025 - Housing Wire

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

April 23, 2025 - Diana Ionescu

Black and white photos of camp made up of small 'earthquake shacks' in Dolores Park in 1906 after the San Francisco earthquake.

The 120 Year Old Tiny Home Villages That Sheltered San Francisco’s Earthquake Refugees

More than a century ago, San Francisco mobilized to house thousands of residents displaced by the 1906 earthquake. Could their strategy offer a model for the present?

April 15, 2025 - Charles F. Bloszies

Millbrae BART station.

HSR Reaches Key Settlement in Northern California City

The state’s high-speed rail authority reached an agreement with Millbrae, a key city on the train’s proposed route to San Francisco.

4 hours ago - San Diego Post

Spiral ramp on exterior of parking garage in downtown Spokane, Washington.

Washington State Legislature Passes Parking Reform Bill

A bill that would limit parking requirements for new developments is headed to the governor’s desk.

6 hours ago - OPB

Missouri state capitol dome in Jefferson City, MO.

Missouri Law Would Ban Protections for Housing Voucher Users

A state law seeks to overturn source-of-income discrimination bans passed by several Missouri cities.

6 hours ago - Missouri Independent