But for one item in particular — houses — we’ve seen suchsharp inflationover decades that it’s starting to change the landscape of American economic life. What happens in society, and in history, when costs for basic necessities, like shelter and food, shoot up in price?
Let’s start by going back four decades, to 1984. The movie “Ghostbusters” was a blockbuster that year. And the median price of a new home wasn’t so scary: $79,900 in the fourth quarter of 1984, according to data from the Department of Housing and Urban Development.
Since then, consumer prices overall have risen 203%, according to the Bureau of Labor Statistics information and analysis section. Meanwhile, the median price of a new home was$417,700 in the fourth quarter of 2023. That works out to an inflation rate of 423%.
the rhetorical question: “Are you better off relative to previous times? Housing leads the list of things where the answer to that question today for many people is: ‘No, I’m not better off.’”
I always tell people to look at the average salary and home price for a year and calculate how many hours it’d take to buy a home. Then do the same for now and from the 70s, think it was almost a 5.5x increase. Inflation is fine when it’s across the board, but because salaries aren’t keeping up it’s creating bigger and bigger gaps.
It's ridiculous too because it's creating whats essentially a reverse wealth transfer. Millennials & GenZ have to give all the money they earn (doing actual labour) to people who did absolutely nothing to earn that money. Housing as an investment doesn't make sense from any perspective, it's one step removed from a pyramid scheme. Prices cannot keep going up indefinitely when no value is being created.
God this shit makes me so fucking angry. Our generation has been fucked by the previous generation and they won't fix it they've caused because it hurts their bottom line.
Back in 1960, the US minimum wage was $1.00/hour and the price of the average home was $11,000.00 In those days.
note =if you feel the need to say that houses are bigger today, or we have better technology, please add how inflation was the driver that made that stuff happen.
note =if you feel the need to say that houses are bigger today... please add how inflation was the driver that made that stuff happen.
Zoning was the other driver that made that happen. When developers are required by law to buy a relatively large, expensive piece of land to put a single house on, they have to make the house big and/or luxurious in order to be able to sell it for enough to make a profit.
If you let them subdivide into smaller lots, or build multiple units on the lot, they could charge less per dwelling unit.
(Of course, suburban governments have historically refused to do that because then "the wrong people" (read: blacks, who are poorer than whites on average because of previous institutional racism) would be able to afford them.)
Disclaimer: this comment is not arguing that housing is easily obtainable.
If you let them subdivide into smaller lots, or build multiple units on the lot, they could charge less per dwelling unit.
This is exactly why I encourage people to look at older neighborhoods. In certain spots of the midwest, you can find beautiful 30s homes that were built extremely well: brick, less engineered wood, and the triumph of the home over the filter of time - for less than $70k. The surviving 30s houses were built well enough to survive nearly 100 years. On top of that, those old neighborhood designers knew better than today for exactly the reason you mention. They were trying to build affordable housing, and that manifested itself in smaller houses, more neighborly communities, more proximity to your neighbors, and walkable proximity to surviving corner stores/bars. Oftentimes, modern bus routes run on top of the old school tram lines that serviced these neighborhoods.
If you find one of these gems in a town with a big employer, you could feasibly pay down a perfectly adequate and enjoyable home in less than 5 years - assuming you have an in with the company.
Central IL is a good example what for Galesburg, Peoria, Bloomington, and even Morton.
If you manage to secure a salary at Rivian while fixing up a 30s Bloomington house, I feel you'd be in pretty good shape. I understand that securing a good salary is a huge effort though.
Ban corporate ownership of residential housing and implement a land value tax. Problem solved. Won't happen though, probably shouldn't even give a shit to keep writing this.
In my studies, the acceleration of housing inflation began around 1973. Back then a house was about $30K.
Let’s start by going back four decades, to 1984. The movie “Ghostbusters” was a blockbuster that year. And the median price of a new home wasn’t so scary: $79,900 in the fourth quarter of 1984, according to data from the Department of Housing and Urban Development.
Goverment controlled pricing would definitely help. Tie the price of homes to be no more than 5-10% of the tax value. If you really want to sell a home for 1 million, then pay a property tax close to that.
In my home country, Portugal, there is a massive house price bubble (especially in relation to the average incomes over here, which are much lower), so over half of young University students are leaving the country when they graduate, the average age for people leaving their parent's home is 34 and young adults have children later and have fewer of them, all in one of the most aged countries of Europe.
Whilst I don't expect all of the same problems in the US, things like delayed parenthood and lower birth rates tend to really fuckup up the Economy over the course of a couple of decades since they lead to falling populations and importing people from countries with lower educational standards doesn't exactly help a country's Economy keep high-value-added industries running.