The phrase "home ownership" elides a lot of detail. What percentage of income is spent on the home now vs then? Probability that current owners will default due to major unforeseen cost, etc.
Last time I did the math on this using median incomes, median home prices and mid year interest rates for 1980 vs 2022 it was something like 24% vs 28%. I’ll see if I can find the math and sources
Interesting. I wonder if using medians is valid though. Incomes and prices are so localized that they may not represent what an actual human in an actual place could expect to be faced with.
There's a whole lot of anecdata over the last few years that's not accounted for by a 4% increase.
I agree, it doesn't make sense. Home prices just about everywhere in the US (including a lot of rural areas) went up way more than 4% between ~2020 and 2022, and that's with annual CPI inflation at <3%. Maybe some of that was eaten by the 2022-2023 inflation period, but I don't think either the increases in home prices or consumer prices were reflected in wages. I'm sure this can all be found in the right FRED time series; if someone has the motivation to dig for it, I'm happy to be proven wrong (but happier to be proven right).
Yeah, if urbanism/centralization (of where people live and also the economy) increased over the same period, the raw figures may give a misleading picture of what things are really like. There are a lot or rural towns that have been shrinking over that time span, and cheap housing in those places doesn’t meaningfully offset rising prices in growing cities.
Sincere question - why not? It seems like the idea is that someone owning one cheap house in a rural community is of less consequence than another higher value home owned in a higher value market. And I'm sure some math could be applied in economic terms to bear that out. But looking at it from a human perspective, I have a hard time accepting that one is better than another.
It’s one of several factors that could mean the prices seen by the median person looking for a house are worse than that 4% median house price increase suggests.
To take it to an extreme to illustrate why this may matter, if one town gets abandoned and the houses all sell for $1 to a single family, while all the former residents move to another similar-sized town that sees prices more than double… you’d be best off ignoring or down-weighting the effect of those $1 houses if you’re trying to figure out how the housing market is looking to most people.
Though it’s possible the figures used for the analysis already account for that kind of thing, in some fashion. Are they actual sale prices, or asking prices? Do they only count sales to someone who’s intending to use the dwelling as a primary residence, or all sales? There’s a lot of room for the median experienced house price for a person just trying to buy a place to live to differ from the median on-paper, depending on how it’s handled.
Using anecdata as evidence is a textbook example of information bias. There are multiple layers of self-selection bias taking place when an anecdote is volunteered.
Even within a single city, median house values are pretty meaningless. There is no median house or neighborhood. It’s a blend of multiple neighborhoods and housing inventory, just an artifact of recent sales history in an aggregate set. If you actually went shopping with the median value as your budget, you’d likely find a lot less desirable and a lot out of reach, not a lot at that budget. At least this has been the case where I’ve resided.
Edit: nice formatting