Chart Reveals How Much Home Prices Have Changed Compared To Income Since The 1980s And The Results Are... Not Great
Sheremetio | Shutterstock Bantr Business recently reported that while average household income has increased since the 1980s, the median home price has risen even further, making buying a home nearly impossible. Homes have always been a big purchase. It’s not like buying a house was ever really cheap. However, the price of homes seems to have increased at an alarming rate in recent years.
It’s not uncommon to hear young people today wistfully talk about how their parents were able to buy a home at their age, but they can barely afford rent for a small apartment. Often, young adults are blamed for their own economic problems because of the way they spend. But, finally, the numbers are validating young people and showing that buying a house with a modern paycheck is more of a dream than a reality.
The median home price is now more than five times greater than the average American household’s income.
News outlet Bantr Business shared a chart in an Instagram post that showed how home prices and income have changed over the years. Let’s just say it was not very encouraging. According to their data, the average American household made about $23,620 a year in 1985. The median home price in the country was only 3.5 times higher at $82,800.
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This means that buying a home certainly wasn’t easy in 1985. It still took a lot of saving to make the purchase. But now, things are abysmal. The average income is $83,730, which sounds like a nice upgrade, but doesn’t really mean much when it’s compared to the median home price of $426,800.
So, yes, the median home price is now five times the household income. That means the median household income has gone up 255%, which isn’t bad, but the median home price has increased by 415%.
“It’s not just a feeling,” Bantr said. “Homes really did get more expensive faster than Americans’ paychecks could keep up.”
Average incomes and home prices were pretty evenly paced through the 1990s, but things have changed.
According to USA Facts, yearly incomes and housing prices “have followed fairly closely” in most states. In fact, around 2008, wages were actually increasing at a greater rate than the prices of homes. That’s all shifted in recent years. Over the last decade or so, home prices increased by 74%. Wages only increased by 54%.
Now, since the COVID pandemic, home prices have risen at a faster clip than wages in almost every single county in the United States. It’s creating a crisis.
“In most of the western U.S. and almost every predominantly urban county, a single average earner couldn’t afford to buy a median-priced home in their county in 2022,” they said. “One in nine Americans lives in a county where two average earners could not afford the median home.”
The housing market is contributing to the cost-of-living crisis.
According to Zillow’s affordability calculator, if you made $83,730 a year and made a down payment of $20,000 on a house, you could afford a home that costs approximately $279,521. That’s almost $200,000 off what the median home costs these days.
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It’s no surprise, then, that when Deloitte surveyed Gen Z and millennials, nearly 66% said that they believed owning a home themselves would be “harder or even impossible in the future,” per the World Economic Forum. Young people are being hit the hardest by the cost-of-living crisis and the increase in housing prices. They never had the chance to get into the market before things got so insurmountable.
Americans have really been put in an impossible situation. The American dream of buying your own home is becoming less of a reality since wages are not increasing at the same rate as housing prices. It really leaves people with no choice but to continue renting, even though real estate is such an excellent investment.
Mary-Faith Martinez is a writer with a bachelor’s degree in English and Journalism who covers news, psychology, lifestyle, and human interest topics.
