Sticker prices continue to rise recently but inflation is increasing too which keeps "real" prices static.
Thursday, February 14, 2013
House Prices: 1890-Present
House prices tend to hold their real value over time. However, there are peaks and troughs. Here is an inflation adjusted look at housing prices in the U.S. since 1890.
Sticker prices continue to rise recently but inflation is increasing too which keeps "real" prices static.
Sticker prices continue to rise recently but inflation is increasing too which keeps "real" prices static.
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2 comments:
If this is true, then how did people generally pay cash for houses prior to about 1950's? Did they just take longer to build the houses? It is virtually unheard of for owner/occupiers to buy a house with cash (in the middle and lower class). I am not questioning your methodology, this is an honest question. Are we all just more house-poor than we used to be?
Karin, good questions. We actually spend much less of our total income on housing than we did prior to 1940. Today we spend 35%-40% of our monthly income for a mortgage payment. Back in the day, it was more than that. Transportation costs have gone up from 3% in 1900 to 15% today. Mortgages have helped us build more houses and more cheaply due to economies of scale which translates into bigger homes at a more affordable cost. The down-side is that quality is suffering. My home took two years to build (1908-1910) and was paid for with cash. Interestingly, seller financing was used to purchase homes back in the day as well.
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