WRE News March 15, 2024
Buyer
For more than 60 years, home prices have raced ahead of inflation levels – and the gap has expanded considerably over the past decade.
According to a new data analysis from St. Louis-based Clever Real Estate, home prices today are 24 times higher than they were in 1963 – in comparison, inflation is only 10 times higher. The data analysis determined that if home prices had kept pace with overall inflation since 1963, the median American home would cost only $177,511 today, which is roughly 2.4 times less than the current median price of $431,000.
The data analysis also showed increased 31% over the past decade while home prices are up 63% (from $264,800 to $431,000).
Home prices have also raced ahead of incomes. Since 1985, incomes have risen 3.2 times while home prices rose 5.6 times during the same period. As a result, purchasing a typical home today requires 6.3 years’ worth of household income, more than double the 3.5 years required in the 1980s.
Of the country’s 50 largest metro areas, the data analysis found 14 where the typical home price at least tripled since 2000. Miami’s home prices have increased the most (299%), while Cleveland’s have increased the least (78%). Among states, Hawaii has seen the largest home price increases since 2000 (309%), while Louisiana has seen the smallest (86%).
However, last year offered an anomaly when inflation rose faster than home prices for the first time since 2011. During 2023, home prices rose 2.6%, compared to a 3.3% increase in inflation.
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