Posted on 05/30/2017 10:04:24 AM PDT by Thalean
In 1973 the median household income was $9,265...
Consider that the median sales price of a new home in January, 1973, was only $29,900—3.2 times the median household income. In other words, if the median family saved up every penny earned, and put it towards a new home, it would take just over three years to buy a brand new house.
This held relatively steady for the next decade. In 1985, new home prices crept up a little, to 3.7 times the median household income.
It was during the 1990s and 2000s that home prices began to skyrocket towards where they are today.
In January 2017 the median sales price for a new home was $317,400, which is 5.6 times the median household income of $56,516.
All told, houses are 73% more expensive today, in real terms, than they were in 1973...
The US Census started tracking the median lot size (in square feet) for new home construction in 1976. During that year, the average lot was 10,125 square feet. In 2015, it’s only 8,600—the smallest on record.
So not only are houses getting more expensive, but we’re getting less land as well.
In the interest of fairness, I’ll also point out that the median new home is larger, in terms of square footage, than older homes as well—so it’s not a total loss.
(Excerpt) Read more at nationaleconomicseditorial.com ...
Yep, and a lot of that is driven by the liberal’s demand for “smart growth”. The liberals who run many city, village, and town halls place enormous “development fees” on those who subdivide property. The municipality does this to wring out every last dollar from the developer who simply passes the cost on to families who purchase a lot for a home.
Additionally, municipalities do this to pack people in to avoid “sprawl”, which liberals believe it’s their job to prevent.
Around here, the money that the county charges now for new building permits can add significantly to the final cost to build a new house. It would blow your mind how much they charge to do almost nothing.
And also, what were the Environmental Impact Fees in 1973 (if any) as opposed to today (which are quite substantial, at least here in Florida...).
% increase means little without removing simple inflation.
“Two pounds of ground coffee was $1.79 in 1973, and today it’s around $6.70; that’s a 270% increase.”
Considering inflation alone turns $1.79 then into $10.27 now, we’re actually looking at a _decrease_ in coffee prices of about 35%.
So what if prices went up 10x if income did too? Numbers just adjusted for the fact that the value of a dollar decreased 90% - a story in its own right, but separate from the alleged point of this thread’s lead article.
Breaks my heart.
Sold last year - some improvements over the years . . . 2.2 million
We bought ours in 2004 for $189k it was just appraised for $320k. We’ve put about $60k into it tho’
Not true. 1960's dollars are not worth the same amount as 2017 dollars.
Well no kidding? Why do ya think it takes these people two freaking incomes just to keep from going belly up? And now add that worthless dollar to everything these poor tax paying suckers pay for.
One loses their flaky job in this meat grinder and they quickly find themselves getting economically gang banged.
The median sale price may be > $300k in 2017 (driven up by a lot of housing sales in expensive coastal markets and new homes - which are only being built for the upper middle class and upper class - very few starter homes are being built), but the median estimated value of homes in the US is between $200k-$225k, which isn’t that far off what it was in 1973 in terms of cost/income. The difference is coastal pricing has gone way higher since then, the average home size is nearly 50% larger than what it was in 1973, and homes today have a lot more wiring and much nicer fit & finish than homes in 1973. Mortgages rates were also higher in 1973 than today, so the real cost is also lowered by that. That said, if you live in California, southern Florida, or the Northeast, you will be paying out the wazzoo for your home.
Of course. I just illustrated inflation by giving the raw prices from 1973 compared to today.
I agree, price inflation of many everyday commodities is actually less than the overall rate of inflation over the last 44 years.
But "simple inflation" is not so simple; it is an aggregate of many, many individual prices.
Some have said that the real driver of the inflation we've experienced since the early 1970s was the result of Nixon's ending the gold-backed dollar back in 1971.
He is excoriated for that by Conservatives, perhaps rightly. But his hand was forced by the French, who demanded that we (America) redeem the dollar reserves for gold at $35/oz, which demand forced the end of the Bretton Woods system that was created during World War II.
There's no question that the inflation curve really took off around that time, but the Arab Oil Shocks of 1973 and 1979 also had a huge effect. Perhaps the Bretton Woods cancelation and the Arab Oil price increases are connected, I don't know.
Today, the value of the world economy is essentially driven by the price and availability of energy, which is the cornerstone of all other values.
That prices for things like soup and houses has stayed as low as it has is because of technology, IMHO, particularly information technology, which has resulted in huge improvements in efficiency across many sectors of the economy.
300k? Ya can't touch a home in the senseless murder district in LA for less than that...lol
“On the other hand, the price of an iPhone in 1973 was... infinity”
Closest machine of the era (some years later) was the Cray 2, costing $42M and filling a room.
Square footage is +50% vs 1973, plus today’s homes have Central AC, granite counter tops, hardwood floors, wiring for cable, and many other luxuries that were not common or around in 1973. The median home price sale is skewed also by two factors - 1) New homes are ONLY being built at the upper middle class price point and above - very, very few builders are messing around with starter homes due to the lower margins and 2) Significantly large number of transactions in California, NE and markets like South Florida that have skyrocketed since the early 1970s. The estimated median home value in the US today is only like $200-$225k, not the > $300k this article sites, which is a much closer income to price ratio, not even counting the extra sq ft and nicer amenities.
That’s about right - implies ~2% inflation/home appreciation per year + improvements.
Great points!
Although I would mention (just as a curiosity, not because it has any great meaning) that in the late '60s, high-end suburban homes where I lived were being built with central vacuum systems and intercoms, both of which have disappeared, although for different reasons.
I know this because my well-off school friends had these things in their homes, which I envied (at the time) and thought were like something the Jetsons would have.
Nope - certainly not in the LA area, but you can buy a brand new 2 car garage, 2200 sq ft home around the edges of Charlotte NC for 300k or for 225k a bit further outside of the city or a “used” home for less than that. In many smaller cities in the Southeast, it’s a lot cheaper than that. You can buy a 1400 sq ft 3 bedroom townhome in a great part of town in most of the southeast for just over $100k.
Astonishing-——where on earth do the young folks starting out buy a home now?
.
The flood/invasion of foreigners ballooned the market.
It’s another reason why there is so much divorce in the U.S. today...The young working married couples are constantly on a razor wire tight rope just paying all these insane prices...Month after month...
Today, I would not recommend anyone buy a home unless they have a huge bank account, huge down payment and bullet proof secure jobs. Otherwise, they could find themselves in a lifetime of crushing debt, divorce etc...
It’s become extremely risky for those in Middle America with middle incomes to try and do the traditional family and home buying thing.
My father still does central vacuum systems and intercoms, actually, nearly always for high end homes (> $600k or 3x or higher than median home price in his area), with a lot of regularity.
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