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Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

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Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#11

Post by eyelidlessness »

jschveibinz wrote: post #2

Note that one factor may be population, which has increased about 35% since 1987. Buildable (and desirable) land is finite.

And “desirable” is a fairly dynamic thing with really unequal outcomes. The people who are best able to afford it (yes the gentry, of gentrification) have shifted considerably in their preferences in the past 20 years or so, from large suburban properties to much more dense urban centers or at least close/quickly accessible proximity to them. Scarcity of actual space to develop anything increases as population density does too. Some of this desirability has shifted back since the pandemic, but I don’t think it’ll be enough to negate the non-linear price inflation that’s happened and still is. Major and medium sized cities are just growing faster than the land and policy incentives can keep up with, especially relative to overall population growth.

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#12

Post by eyelidlessness »

alar44 wrote: post #4

As it should be. Avg home size in 1987: 1780 SQ ft Avg home size in 2022: 2540 SQ ft

I’d much prefer 700 sqft or so and find this average home size increase harmful to my quality of life. Granted it’s less extreme in urban areas I prefer to live, but it still dominates new development of single dweller units. I basically have to leave the city now to have a yard for my pup to run around in, because the incentive is to sell luxury or rent to multiple tenants. We’d be perfectly happy with a tiny house in a tiny yard. I would and even continue to pay a premium to do that where I can access other amenities on foot. It just increasingly isn’t possible to do that.

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#14

Post by bko »

j_walter wrote: post #3

What has the square footage and amenities for single family homes done over the same time frame? You aren't comparing apples to apples... https://www.propertyshark.com/Real-Estate-Reports/2016/09/08... Not to mention the average household size (number of people) has been dropping...so the square foot per household member is up drastically...

I would also note that you have to consider mortgage rates. They're on the rise now and I'm not sure if it'll still hold, but last time I looked at it the overall payment is down.

In 1987, mortgage rates were about 15%. To put that into perspective, a $100k 30 year fixed rate mortgage would cost you $1,543/mo at 18.45% and only $442/mo at 3.38%.

I only hope that rates going up will deflate the real estate prices but so far they don't appear to be budging

https://mleverything.substack.com/p/buying-a-home-in-the-us-...

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#15

Post by PyWoody »

I bought my home in the middle of nowhere in New England four years ago for $220k. I could sell it tomorrow for $400k. If I wanted to test my luck, I'd be able to sell it in 2-3 months for $450/500k.

The median _family_ income for my area is $52k/year (2007-2011).

Things are fucked for the average person.

I keep coming back to the Player Piano[0]. It really is the "Reeks and Wrecks" vs. the Doctors.

[0] (https://en.wikipedia.org/wiki/Player_Piano_(novel))

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#16

Post by danans »

These summary stats mask a huge amount of regional variation. My parents bought their house in a Midwestern suburb in the early 80s for about 100k, or 270K today. The house is worth 300k today, a 9% increase over 40 years. Meanwhile my West Coast home in has increased in value 33% in the 10 years I've owned it accounting for inflation, or 250% since it was built in the late 1990s.

My parents house is a small fraction of their assets while my house is a significant portion of mine. Likewise my mortgage payment is a much larger chunk of my income than theirs ever was.

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#17

Post by oneoff786 »

jacobr1 wrote: post #8
oneoff786 wrote: post #6

Earlier quoted context omitted.

This article says homes are 74% larger, but compares to 1910. Not sure why the cost per household member should matter all. I didn’t get a family size discount on my home.

> I didn’t get a family size discount on my home You do though. The cost of kitchen for a couple without kids, and one for a family of 5 is roughly the same. You might have more square footage overall for house, with more people, but the construction costs are concentrated on the shared spaces like kitchens or even things like living living rooms where square footage will scale sub-linearly with the number of people…

That has no effect on the price of single family homes. You’re bringing in a very different metric.

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#18

Post by jschveibinz »

refurb wrote: post #13
jschveibinz wrote: post #2

Note that one factor may be population, which has increased about 35% since 1987. Buildable (and desirable) land is finite.

Detroit used to be highly desirable land.

This is a very interesting point. Economics surely plays a factor in the price of real estate, as does climate as suggested by the other comments. Here is a link to the change in house prices in all 50 states. It is not at all uniform:

https://www.google.com/amp/s/www.cnbc.com/amp/2017/06/27/how...

Re: Adjusted for inflation, a Single Family Home costs 75% more than it did in 1987

#20

Post by danamit »

I compared prices of houses in Morocco vs America. And for same prices, American homes were WAY better, in all ranges of prices.

But I would totally lose an argument if I tried to argue that the same salary goes a longer way in America, everything is cheaper there, except if you average out the quality of life.

People are simply accustomed today on a better quality of living, it is not only the square footage, everything else is more expensive. At the same time I won't call it a non-issue, if that's what society is demanding, then there is something wrong, you can't easily unplug and live in 1987. We live in a society sadly :(

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