Why Housing Is Actually More Affordable Today Than In 1980!
WHY HOMES ARE MORE AFFORDABLE TODAY
In the midst of my daily excursion into the bowels of Twitter, I saw a great tweet from the Center for Human Progress.
It had a link to this excellent article, titled U.S. Housing Became Much More Affordable Over The Last 40 Years.
It was fascinating to say the least and this is again some excellent data to share with clients who fear they might be overpaying for homes (because they probably aren’t).
In 1980, the median home price was only $64,600, while in 2020, the median home price had jumped to $336,900!
On its face, this is pretty scary.
But, the average size of houses jumped from 1,595 square feet to 2,261 square feet.
So, buyers are getting a lot more for their money nowadays and that does not even account for all the improvements in construction and amenities (dual-paned windows, wifi, better insulation, larger garages, more storage, etc.).
In addition, average earnings are way up and interest rates have fallen from almost 14% to 3%.
So, when we account for: (1) the increased size of housing; (2) the increase in hourly earnings; and (3) the drop in interest rates – buyers have to put in about the same number of hours to buy a square foot of housing today as they did in 1980.
My excessively brief summary above does not do the article justice though, so I still recommend reading the full article.
LITTLE PINK HOUSES
In the early 1980s, John Mellencamp sang about “Little Pink Houses,” no doubt thinking about interest rates and affordability.
(I just listened to that song, and one out of one Boomers surveyed think it is pretty awesome, as an FYI. 😊)
Anyway, if Mr. Mellencamp recorded that song today, he would have to retitle it: “Big, More Affordable Pink Houses.”
Less catchy, sure, but far more accurate.
And finally, this unexpected twist is one more reason to paraphrase Mr. Mellencamp and think… Ain’t that America. 😊
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