Here in Seattle, you’re not getting anything livable for less than 500K.
Just imagine how expensive they would be if they didn’t have all that ‘cheap labor’ building them!..........
It isn’t just the real estate; look at property taxes in 1973 vs today.
These reports can be deceiving. Its like saying a car is more or less expensive than in 1973. Or a cell phone is more or less expensive than in 1998. The product itself changes. Did the 1973 house have central air conditioning? How big was it? What type of windows did it have? How energy-efficient was it? Did it need to be painted every couple years?
I suspect that, generally, houses are more expensive today in suburban areas. But there are no easy comparisons.
It was during the 1990s and 2000s = women’s “lib” feminism and two income house holds.
cheap credit = expensive houses
“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.”
Fairness? That’s half the objective point! Interest has scaled prices, and we’ve normalized substantially larger/fancier homes. Another good case for “HowTo Lie With Statistics”: present an outrageous statistic, lament it, then much later say “oh by the way it all makes perfect sense and thus is not outrageous”.
I’m living the same income:price ratio he presents from way back when. Ergo, prices have actually dropped - I’m getting a lot more house for my money.
How bad is it? It takes two full time incomes in today’s America just to buy a home. And if one doesn’t have a bullet proof secure job, they could end up cursing that home they bought in short order.
The price of a gallon of gas in 1973 was 39 cents. Today it is about $2.35. That's a 500% increase.
The price of a can of Campbell's Chunky Soup in 1973 was also 39 cents. Today it's $1.99, an increase of 410%.
A Big Mac was 65 cents in 1973. Today, the average Big Mac will cost you $3.57 in the United States. That's a 450% increase.
Two pounds of ground coffee was $1.79 in 1973, and today it's around $6.70; that's a 270% increase.
But interest rates have dropped from 8% for a 30 year mortgage in 1973 to 4% now. Ignoring down payments, because I’m lazy, that 1973 house took 28.2% of the median income to pay for it. The 2017 house takes 32.2%. Not that big of increase. Now compare the square footage of the two eras’ houses.
Um...population has increased. Supply and demand. Not exactly rocket science.
We bought and financed a nice 1200 square ft. brick house in Dothan, AL for 23,500 including down payment. Five years later in 1979 sold it and after all fees etc. were paid, got a check for $12,800.
You could not go wrong buying back then. Our house payment was less than rent. We did do a little bit of improvement, new carpet, backyard fence, but still it appreciated around 15,000 in that short time.
I bet now it would be approaching $100,000 if not more.
There are a lot more million-dollar neighborhoods around here now ..
Informative post
Buying a primary residence house as an investment is stupid. You want a place you like and that fits your needs. Anything else is doomed to disappoint.
We bought a house in eastern MA in the late 70s for $74,000——it sold last year for $900,000.00.
(Only one bathroom had been added.)
.
Blame urban crowding and cheap money.
Cheap money is not normal and is the cause of a whole bunch of problems we have now.
Normal interest rates for houses are 6 to 7%. That is what we lived with for ages. 3% is rediculous for the risk involved.
Buy your car for cash, out of pocket change.
Learn to maintain it yourself.
(It’s great to have rich friends who trade up often.)
Your house payment = one week’s take home pay.
Learn to maintain it yourself.
Plow every dime in, and don’t fix a dang thing until the house is paid for.
Can’t afford the area? Move
Taxes too high? Move
That “high-paying” job is only paying the taxes and all that required maintenance.
Anything else and you’re blowing smoke up your wah-zooo.
Live abundantly within your means.
Give generously with your heart.
Everyone else can go to H.E. double toothpick.
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.