(Updated) Rising prices have long been a necessary evil of the U.S. economy. Over the past few decades, however, surging housing prices have proved a more prominent villain.
According to a new analysis from Clever Real Estate, home prices have risen 2.4 times faster than inflation since the 1960s. If home prices had merely kept pace with inflation, the median home would cost only $177,500 today—compared to the $431,000 it costs today.
Despite Americans’ fear of rising inflation, home prices have historically risen much faster. In the last ten years alone, inflation has increased 31%, while home prices are up 63%.
Homeownership has always been costly, but historically, it has never been this expensive. In the 1980s, purchasing the typical home took about 3.5 years’ worth of household income. Today, it takes 6.3 years’ worth of household income.
Clever Real Estate conducted a comprehensive analysis of national, statewide, and citywide home prices over time based on data from the Federal Reserve, the Bureau of Labor Statistics, and the Zillow Home Value Index to learn more about the relationship between home prices and inflation.
Hawaii has seen the most jarring increase of any state, with home prices quadrupling from about $203,000 to over $831,000 since the start of the millennium.
Iowa home prices have risen 125 percent in the past 23 years, from a median of $91,445 in 2000 to $205,375.00.
