Homes Priced in the S&P 500
How many units of the S&P 500 index it takes to buy the average American home. The line has fallen for four decades because stocks outran houses. The interesting part is why regular people built wealth in houses anyway.
| Year | Home in S&P 500 units | Average home price | S&P 500 level |
|---|---|---|---|
| 1970 | 320 | $26,650 | 83.22 |
| 1971 | 286 | $28,100 | 98.28 |
| 1972 | 275 | $30,075 | 109.21 |
| 1973 | 327 | $35,100 | 107.42 |
| 1974 | 469 | $38,725 | 82.55 |
| 1975 | 494 | $42,525 | 86.16 |
| 1976 | 471 | $48,050 | 102.02 |
| 1977 | 553 | $54,350 | 98.21 |
| 1978 | 653 | $62,700 | 96.02 |
| 1979 | 698 | $71,900 | 103.02 |
| 1980 | 643 | $76,375 | 118.78 |
| 1981 | 650 | $83,175 | 128.04 |
| 1982 | 700 | $83,850 | 119.73 |
| 1983 | 560 | $89,775 | 160.42 |
| 1984 | 608 | $97,550 | 160.47 |
| 1985 | 540 | $100,825 | 186.85 |
| 1986 | 474 | $112,075 | 236.36 |
| 1987 | 445 | $127,575 | 286.84 |
| 1988 | 522 | $138,650 | 265.78 |
| 1989 | 459 | $148,125 | 322.83 |
| 1990 | 446 | $149,075 | 334.59 |
| 1991 | 392 | $147,275 | 376.18 |
| 1992 | 348 | $144,675 | 415.74 |
| 1993 | 327 | $147,475 | 451.41 |
| 1994 | 335 | $154,175 | 460.33 |
| 1995 | 291 | $157,750 | 541.64 |
| 1996 | 247 | $165,525 | 670.83 |
| 1997 | 200 | $174,875 | 872.67 |
| 1998 | 167 | $181,150 | 1,084.31 |
| 1999 | 147 | $194,675 | 1,326.06 |
| 2000 | 144 | $205,375 | 1,427.01 |
| 2001 | 177 | $211,050 | 1,192.08 |
| 2002 | 228 | $226,700 | 995.63 |
| 2003 | 254 | $244,550 | 963.69 |
| 2004 | 241 | $272,125 | 1,130.55 |
| 2005 | 241 | $291,275 | 1,207.06 |
| 2006 | 232 | $303,900 | 1,310.67 |
| 2007 | 210 | $309,800 | 1,476.63 |
| 2008 | 237 | $289,075 | 1,220.89 |
| 2009 | 285 | $269,350 | 946.74 |
| 2010 | 239 | $272,025 | 1,139.31 |
| 2011 | 209 | $264,600 | 1,268.89 |
| 2012 | 209 | $288,225 | 1,379.56 |
| 2013 | 196 | $321,650 | 1,642.51 |
| 2014 | 179 | $345,450 | 1,930.67 |
| 2015 | 170 | $350,450 | 2,061.20 |
| 2016 | 172 | $359,650 | 2,091.84 |
| 2017 | 156 | $381,150 | 2,448.22 |
| 2018 | 139 | $382,475 | 2,744.68 |
| 2019 | 130 | $379,875 | 2,912.50 |
| 2020 | 121 | $387,900 | 3,218.50 |
| 2021 | 106 | $452,675 | 4,266.80 |
| 2022 | 126 | $516,425 | 4,100.70 |
| 2023 | 119 | $507,125 | 4,280.78 |
| 2024 | 94 | $507,875 | 5,428.10 |
| 2025 | 84 | $519,700 | 6,210.97 |
| 2026 | 68 | $514,600 | 7,570.03 |
In 1982, with inflation raging and magazine covers declaring the death of equities, the average home cost 700 units of the index, the all-time high. Today it costs 68, the all-time low, less than half the prior record set at the dot-com peak. Read it honestly: houses did not get cheap in dollars; stocks got expensive, relentlessly, for four decades. Unlevered and before dividends, the index turned 1 dollar into 91 since 1970; the average house turned 1 dollar into about 19.
What this means for you
The part the chart cannot show: nobody buys a house unlevered.
$25,000 of your cash controls the full $500,000 asset. That is 20-to-1 leverage.
At housing's 5.4% historical average appreciation, the full $500K grows, not your $25K. Roughly a 108% gain on your cash, before costs.
$25,000 in the index at a 10% total-return year. Strong, real, and one tenth the equity move, because there is no leverage.
Borrowing 20-to-1 against stocks triggers forced liquidation on any dip. A 30-year fixed cannot be called for a price decline. Make the payment and nobody can make you sell.
Stocks won the unlevered race, and it was not close. But no ordinary person can hold 20-to-1 leverage on the S&P 500 through a bad month, let alone thirty years. The 30-year fixed-rate mortgage is the only instrument that lets a regular household apply that kind of leverage to an appreciating asset with a locked cost, no forced sales, and a place to live inside the position. That, not superior price growth, is why housing built the American middle class.
Part 2: the same $25,000, two different futures.
Take the down payment from the panel above and run both paths forward for 30 years using each asset's own historical average: the house at 5.4% appreciation, the index at a 10% total return. Same starting cash, and this version charges the buyer the full carrying cost: taxes, insurance, and mortgage insurance until it drops at 20% equity via the automatic 78% rule.
- Step 1: draw the chart. Click the draw button four times to lay down the lines one at a time: the index path, home equity, net profit, then the faster payoff. The controls below stay locked until all four are drawn.
- Step 2: set the rate. It defaults to today's conventional rate. Move it and every figure recomputes.
- Step 3: pick an early payoff strategy. Monthly, annual, or bi-weekly, and enter your own extra amount. Watch the interest shrink and the profit line move.
- Step 4: flip on reinvest. That keeps the freed payment flowing into the index after the loan is gone.
Loan payments include principal, interest, any extra payments, and, when reinvest is on, the contributions flowing into the side fund after payoff.
| Year | Home equity | Home value | Loan balance | Loan payments | Taxes + insurance | Mortgage insurance | Net profit |
|---|---|---|---|---|---|---|---|
| 0 | $25,000 | $500,000 | $475,000 | $0 | $0 | $0 | $0 |
| 1 | $57,380 | $527,000 | $469,620 | $35,766 | $5,508 | $1,757 | -$10,651 |
| 2 | $91,575 | $555,458 | $463,883 | $71,532 | $11,016 | $3,515 | -$19,488 |
| 3 | $127,686 | $585,453 | $457,767 | $107,298 | $16,524 | $5,272 | -$26,408 |
| 4 | $165,821 | $617,067 | $451,246 | $143,064 | $22,032 | $7,030 | -$31,304 |
| 5 | $206,097 | $650,389 | $444,292 | $178,829 | $27,540 | $8,787 | -$34,060 |
| 6 | $248,631 | $685,510 | $436,879 | $214,595 | $33,048 | $10,545 | -$34,557 |
| 7 | $293,553 | $722,527 | $428,974 | $250,361 | $38,556 | $12,303 | -$32,666 |
| 8 | $340,999 | $761,544 | $420,545 | $286,127 | $44,064 | $14,060 | -$28,252 |
| 9 | $391,108 | $802,667 | $411,559 | $321,893 | $49,572 | $15,818 | -$21,174 |
| 10 | $444,034 | $846,011 | $401,977 | $357,659 | $55,080 | $17,575 | -$11,280 |
| 11 | $499,935 | $891,696 | $391,761 | $393,425 | $60,588 | $19,333 | $1,590 |
| 12 | $558,979 | $939,847 | $380,868 | $429,191 | $66,096 | $19,625 | $19,067 |
| 13 | $621,346 | $990,599 | $369,253 | $464,956 | $71,604 | $19,625 | $40,160 |
| 14 | $687,221 | $1,044,091 | $356,870 | $500,722 | $77,112 | $19,625 | $64,762 |
| 15 | $756,806 | $1,100,472 | $343,666 | $536,488 | $82,620 | $19,625 | $93,073 |
| 16 | $830,310 | $1,159,898 | $329,588 | $572,254 | $88,128 | $19,625 | $125,303 |
| 17 | $907,955 | $1,222,532 | $314,577 | $608,020 | $93,636 | $19,625 | $161,674 |
| 18 | $989,977 | $1,288,549 | $298,572 | $643,786 | $99,144 | $19,625 | $202,422 |
| 19 | $1,076,624 | $1,358,131 | $281,507 | $679,552 | $104,652 | $19,625 | $247,795 |
| 20 | $1,168,158 | $1,431,470 | $263,312 | $715,318 | $110,160 | $19,625 | $298,055 |
| 21 | $1,264,857 | $1,508,769 | $243,912 | $751,083 | $115,668 | $19,625 | $353,480 |
| 22 | $1,367,015 | $1,590,243 | $223,228 | $786,849 | $121,176 | $19,625 | $414,365 |
| 23 | $1,474,943 | $1,676,116 | $201,173 | $822,615 | $126,684 | $19,625 | $481,019 |
| 24 | $1,588,969 | $1,766,626 | $177,657 | $858,381 | $132,192 | $19,625 | $553,770 |
| 25 | $1,709,440 | $1,862,024 | $152,584 | $894,147 | $137,700 | $19,625 | $632,967 |
| 26 | $1,836,722 | $1,962,573 | $125,851 | $929,913 | $143,208 | $19,625 | $718,976 |
| 27 | $1,971,205 | $2,068,552 | $97,347 | $965,679 | $148,716 | $19,625 | $812,185 |
| 28 | $2,113,299 | $2,180,254 | $66,955 | $1,001,445 | $154,224 | $19,625 | $913,005 |
| 29 | $2,263,437 | $2,297,988 | $34,551 | $1,037,210 | $159,732 | $19,625 | $1,021,869 |
| 30 | $2,422,079 | $2,422,079 | $0 | $1,072,976 | $165,240 | $19,625 | $1,139,237 |
The red line is gross equity: roughly $2.42 million by year 30, against $436,000 in the index, from identical starting dollars. The gold line is the strictest test: net profit after charging the buyer for everything. Principal and interest total about $1,073,000 over 30 years at the default rate, including about $598,000 of interest; property taxes and insurance add about $165,000 more; mortgage insurance runs about $146 a month until the loan amortizes down to 78% of the original price ($390,000), which takes 11 years 3 months on the standard schedule and totals about $19,600. Extra payments attack that directly: $500 a month cuts the MI period nearly in half. Charge all of it, and the buyer is underwater on paper for a decade (bottoming near minus $35,000 around year six), breaks even in year eleven, and still finishes at about $1.14 million, roughly 2.8 times the index path's $411,000 gain. The costs are real, and the leverage pays for all of them. Hover any year to watch the calculation strip below rebuild the number in front of you.
The same 20-to-1 math works in reverse: a 5% price decline wipes out a 5% down payment on paper, and 2008 to 2011 is sitting right there on this chart. The protection is not that losses cannot happen. It is that you cannot be forced to realize them. The discipline that makes the leverage safe is a payment you can comfortably hold through a bad market, which is a structuring question, not a timing question.
The house does a job the index fund cannot: it replaces rent, the one cost that has never gone down. The index does a job the house cannot: liquidity and diversification. Most people should aim to own both. The mistake this chart argues against is treating the down payment and the brokerage account as rivals for the same dollar without noticing the leverage asymmetry between them.
Financial advisors, this is the chart for the client who says the market beats real estate so they will keep renting and investing. They are right on the first half and wrong on the conclusion, and the 20-to-1 panel above is why. Clients also do not need to liquidate the portfolio to buy: down payment sourcing from securities, reserve requirements, and gift funds are financing questions, and those are handled from here.
How to read this honestly. The S&P line in the ratio chart is price only; with dividends reinvested, stocks won by even more. Homes also carry taxes, insurance, and maintenance that an index fund does not, and homeowners collect an offsetting benefit by not paying rent. The Part 2 projection charges the buyer taxes, insurance, and mortgage insurance on top of every loan payment, which is why the net profit line spends its first decade underwater; what it still leaves out is maintenance on one side and rent on the other. The investor pays rent the whole time, and rent has never gone down. Steady average growth every year is a simplification no real 30 years will match; both assets have losing years, and leverage magnifies the house's losing years exactly as it magnifies the winners. Every figure is a national average and a historical one; past performance does not predict future results. Education, not investment advice.
Related chart: The Rent Line.
Sources: Home prices are the Census and HUD average sales price of houses sold (ASPUS), annual averages, with 2026 using the Q1 2026 reading ($514,600). S&P 500 is annual averages of monthly average closing prices, Standard and Poor's via Robert Shiller's dataset (multpl.com); the 2026 point is the spot level as of July 13, 2026 (7,570), price only, excludes dividends. Ratio equals home price divided by index level. Part 2: rate defaults from the site's live conventional rate (Mortgage News Daily via the calculator's source), rounded to 0.125 and bumped 0.125, 6.43% fallback, adjustable, payment recomputed at the selected rate. Taxes $3,756 per year (0.75%, the Tennessee state average) and insurance $1,752 per year (0.35%), held flat; MI at 0.37% of the original loan until the balance amortizes to 78% of the original purchase price ($390,000), the automatic termination standard, 11 years 3 months on the base schedule and sooner with extra payments; borrower-requested removal based on current value can end MI earlier in practice and the model uses the automatic rule as the conservative case. Net profit equals equity plus any side fund minus the down payment and every dollar of principal, interest, taxes, insurance, and mortgage insurance paid; maintenance excluded, no rent charged to the index path. Interest saved compares against a no-extra loan at the same selected rate. Reinvest directs the freed payment into the index at the same 10% return after payoff, within the 30-year window, while taxes and insurance continue.