Comments on: The Cost of Housing: 1050% Higher than 1970 and Climbing

By: TofuPunk.com | Bloggin’ for a livin’ » Blog Archive » The US has bystander effect

Thu, 08 May 2008 18:48:58 +0000

[...] * Cost of housing is 1050% Higher than 1970. [...]

By: Jack

Jack — Sun, 13 Apr 2008 06:17:14 +0000

One consideration: while all the numbers are interesting, when you are trying to put housing costs into the mix it is misleading to use the home price itself as the indicator. Housing should be considered as a flow, or monthly expenditure. Using this number incorporates the cost of the money (normally) borrowed. As an example: when an individual is looking to buy a house the figure that is important to them is the monthly payment. This number is compared to their income rate to determine if the house is affordable to them. If money is cheap, as it was a few years ago, payments are lower, and people determine that they can afford “more” house. When more people look for “more” house, competition drives house prices up. When money is cheap (and readily available), house prices will go up. This is what has happened in the past few years. The upshot though, is that the price of the house is mostly only an imaginary number for purposes of these kinds of comparisons. It will fluctuate, in conguction with the cost of moeny, to price monthly payments in the competitive market. Better for your comparixons here is to say, for example, that an average house in 1970 would have cost the new homebuyer (i.e. someone who had just secured a loan at contemporary rates) $140 per month, whereas the average house in 1980 would have cost $700 per month.

By: john

john — Mon, 07 Apr 2008 22:39:58 +0000

I guess either you are not married or your wife does not work.
Now a day, most partner or wife or husband do work. So a double income “family” is buying the house. If you consider this, then the housing price are more affordable then previous decade when one partner worked.

By: Brendan

Brendan — Sat, 22 Mar 2008 00:55:51 +0000

I took your numbers above and plugged them into excel, then made a bar graph. I think that the visual representation of the differences between home values and incomes is easier on the brain than simply a series of numbers.

The dark bar is median household income; the light one is median home price, taken from your statistics above.

By: Allen Michaels

Allen Michaels — Mon, 25 Feb 2008 21:02:58 +0000

I agree 100% with John. Use common sense and look at the historic figures and then you won’t get ripped off. I sold my house in 2006 and moved to rental property closer to work. Best decision I ever made. The only thing that can save this economy is to raise the interest rates, drop the house prices to 3X average salary, and watch what happens - economy will rebound fast.

By: John Gruskos

John Gruskos — Wed, 20 Feb 2008 23:37:11 +0000

Why are no politicians approaching the housing question from this point of view? By intervening to keep housing prices at their current high level, politicians are compromising the future of an entire generation for the benefit of those who bought overpriced houses 2004-2007, often with no money down. Raise interest rates and let the bubble pop! House flippers and real estate agents got rich, and millions of middle class Americans got ripped off; that was tragic, but keeping prices where they are through government intervention would be even worse.

By: Allison

Allison — Mon, 18 Feb 2008 20:49:35 +0000

This is a very interesting article. I am a recent college graduate struggling to find a decent job with a decent wage and get on my feet. I find many of my peers in terrible financial situations despite their college graduate status. Many of my peers are waitressing, bar tending, or working in retail, yet all are relatively bright and hard working individuals. Most still live at home with their parents and struggle to pay back student loans, make car payments, pay car insurance, gas, food, etc. Employers don’t return calls, or offer wages that are unacceptable considering the cost of living (I live in south Florida, one of the most expensive places to live in the United States). The future looks bleak for me and my peers and I spend a lot of time wondering how I will ever be able to afford a home, to have children, and to retire.

By: Anne

Anne — Fri, 01 Feb 2008 22:55:06 +0000

Amazing! What a wonderful resource!

I’m a journalist covering the cruise industry. In 1990, the price of a one-week cruise was roughly $1500 per person (two to a cabin). Today it’s much, much lower. I can say that in the Caribbean in 2008, during peak season, a one-week cruise costs $550 per person. Today, $1500 per person gets you a suite.

The reason for this is economy of scale in ship building. The major cruise lines build enormous vessels because the price per/cabin decreases significantly: a ship carrying many more people has one set of officers, one engine, one hull.

So for in 2008, cruises are selling well. People book 6 to 12 months in advance, and a lot of inventory in Europe is gone. The reason this segment of the travel industry is holding up is because a cruise is a good deal. You pay for roughly 80% of your vacation costs up front …. your cabin, all the food and entertainment.

By: Toronto houses

Toronto houses — Fri, 11 Jan 2008 13:58:25 +0000

Everything with exact numbers, percentages is shocking. What you`ve tried to illustrate is really astounding but being an optimistic I`m waiting for even worse situation. Jumping from one employment to another it took me ten years to have a real estate in Toronto. Imagine, that`s a long time. The cost of housing is climbing but your salary remains the same…that`s the image of the 21st century.