The cost of homes in the United States has outpaced wage growth over the past decade. According to the Federal Finance Housing Agency, home prices rose 74% from 2010 to 2022. The average wage rose only 54% during the same time.
It doesn’t really matter which side is out of whack. Housing is unaffordable.
Continuing with the high interest comment that sparked this thread, back then a 10.5% interest mortgage in a typical house was 45% of median income and in 2023 a 6.5% interest mortgage was 53%
If mortgages were still 10.5% in 2023 housing would be 78% of median income.
yeah man… at the time, I was 25 and single and I doubt I made even $12k per year doing oil changes. The house I bought was $33k, and I had two roommates who pretty much covered my <$350 per month house payment. I shelled out a couple hundred more for utilities and could still afford to eat and buy weed…
Don’t forget record setting interest rates.
Thanks for your comment but in this community we always like to see sources.
Could you provide some citations to back up that claim?
I bought a house in the summer of 1988. My interest rate was 10.9% APR. Nobody batted an eye about it either…
Because homes were still affordable then.
1988 Median Household Income ~27k
1988 Median Home Price ~113k
So a home was 4x annual salary
For 2023 the numbers were ~59k and ~$418k Roughly 7x annual salary.
The problem in that equation isnt the cost of housing, its the low wage growth.
https://usafacts.org/data-projects/housing-vs-wages
It doesn’t really matter which side is out of whack. Housing is unaffordable.
Continuing with the high interest comment that sparked this thread, back then a 10.5% interest mortgage in a typical house was 45% of median income and in 2023 a 6.5% interest mortgage was 53%
If mortgages were still 10.5% in 2023 housing would be 78% of median income.
It surely does matter if it is to be changed. But if you just want to complain, sure its irrelevant.
yeah man… at the time, I was 25 and single and I doubt I made even $12k per year doing oil changes. The house I bought was $33k, and I had two roommates who pretty much covered my <$350 per month house payment. I shelled out a couple hundred more for utilities and could still afford to eat and buy weed…