Why Americans feel gloomy about the economy despite falling inflation and low unemployment
Why Americans feel gloomy about the economy despite falling inflation and low unemployment
Inflation has reached its lowest point in 2 1/2 years. The unemployment rate has stayed below 4% for the longest stretch since the 1960s.
You're viewing part of a thread.
There are, but you can't make a living there.
It's all proportional.
Let's say you want to live in a low cost of living state:
https://www.ramseysolutions.com/real-estate/cheapest-states-to-live-in
Mississippi.
OK, I don't know why anyone would want to live there, but sure, let's look at the numbers.
https://www.census.gov/quickfacts/fact/table/MS/BZA115221
Per capita income in past 12 months (in 2021 dollars), 2017-2021 - $26,807
Persons in poverty, percent - 19.1%
https://www.zillow.com/home-values/34/ms/
"The average Mississippi home value is $174,932."
You aren't buying a $175K house making $12.54 an hour. It's not happening.
Good maths but do it again with median, not average
You need to use median household income, not per capita. It's $49,111 in Mississippi according to your source.
The ratio of home price to household income is typically between 4 and 5 in the US, so the median family should be able to afford the median house in Mississippi.
Household income is absolutely not the right metric to use here, because it'll always be proportional to the cost of the house out of necessity.
For example, if the cost of a house goes up relative to individual income, then more people in the family need to start working more hours, and more people live with roommates.
Household income stays proportionally the same, always, but individual income shows you how much people are struggling.
No, it's not the right metric. Which is why people don't use it.
Imagine you make $160K and buy the nicest house you can afford with that income.
Then you get married, and your spouse makes $100K. Your household income has increased to $260K, which means you can afford an even nicer house.
Your per capita income has decreased to $130K. By your logic, you can't afford a nicer house. In fact, with a second income you might no longer be able to afford your current house. That's nonsense.
When multiple people live in a house they all have the opportunity to contribute to paying for it. Some may contribute a lot, some (like children) may contribute nothing. The house you can afford depends on the total amount everyone contributes, aka household income.
if the cost of a house goes up
This doesn't make sense. The cost of a house is fixed when you buy it. It won't ever go up while you live there.
People didn't used to need a second income to afford a house. Now they do.
Household income doesn't show that change. Individual income does.
The median income for a single-income family is $78K. That's enough to afford a house that costs $310K-$390K.
The average individual income in Michigan, where houses are actually selling for around $300k, is $34,768. https://www.census.gov/quickfacts/fact/table/MI/INC110221
That doesn't give the median, but it's lower. Those numbers are always thrown off by a few rich people.
When everyone needs a separate individual house that they refuse to share, then per capita income will be relevant.
But in the real world, people buy houses because they want to share them with their family. On average, 2.5 people live in a single house. And the median household income is $63K in Michigan.
So if you really want to look at per capita income, that means there is $87.5K (2.5 x $35K) available to buy a house, which is easily enough to afford a $300K home.
Again, families didn't used to need 2 incomes to buy a house.
Saying that households can still afford houses is tautological. Of course they can, or they wouldn't be a household.
Who said they need two incomes?
You insist on using per capita income for some reason. That means that even in a single earner family, the income is considered to be divided equally among the family members.
If you are a single earner making $160K in a family with two adults and two kids, then when using per capita income you consider all four family members as making $40K each. That's the definition of per capita.
And that's why it's nonsense to say that per capita income of $40K is not enough to afford a house. A family of five with per capita income of $40K would be in the top 10%.
Household income is total family income, regardless of whether there is one earner or more than one. And it's not tautological. If your household income is very low, then your family may not be able to afford to buy a house.
Wow, it's like you're incapable of reading. Are you a bot?
Yeah, my house was only $60k. 1,200 square foot. Wasn't the best deal I could get, but I'm satisfied with my purchase.
I was also looking at houses in a similar price range in Mississippi.
You don't "need" to spend 'average price' for a nice house. You choose to because you want the luxuries that cause the price to go up.