> The real problem is that household income stopped outpacing home prices in the 1970s.
On a price per square foot basis, home prices have been remarkably stable since 1960s. The share of income spent on housing has also remained remarkably stable. Though prices have ballooned, interest drops considerably, so monthly payments as share of income haven't changed that much.
The way things have gotten worse for people isn't so obvious. For one thing, people have many more choices to spend their money on, such as computers and college. That's created additional pressure on people without the cost of housing itself changing as much as people think, but its a problem someone from 1960 might roll their eyes at. (Hedonistic adaptation?) Then of course there's various income and geographical bifurcations. For example, you can choose to live someplace cheap, but then you're opting out of the highly dynamic and potentially highly lucrative portions of the economy. That's an opportunity cost, but not a literal cost if you're comparing to 1960s lifestyles.
>The share of income spent on housing has also remained remarkably stable. Though prices have ballooned, interest drops considerably, so monthly payments as share of income haven't changed that much.
That is not a good thing for new buyers. It is fantastic for people who bought when prices were cheap and rates higher, because now they have a low mortgage and low rates (refinance). But new buyers must now find higher deposits and have no real hope of every paying their property off early because any over-payments make only small dents in the high prices.
>On a price per square foot basis, home prices have been remarkably stable since 1960s.
I’m not sure that’s true, in fact I’m quite sure it’s not, but I’m willing to change my mind if you have a good source. In particular, home sizes have shrunk since 00 and prices have surely not gone down so it could only be true prior to then if at all.
It depends on how far you want to go back for comparison. The average house size has grown a lot since the 1960s, but dropped some more recently since the housing crisis. But it’s still up, and by a pretty big margin. In the 1950s, the average house was < 1k sqft, today it’s pushing 2.5x that. It’s even larger when computed on a per-person basis.
If you don't trust the sources of those articles, note that I was skeptical, too (of similar articles I had read), which is why I went looking for primary sources.
There's a similar phenomenon with home ownership. The percentage of homeownership has only varied by a few percentage points over the past 60+ years. However, what has changed is the median age of homeowners: they tend to be older. In particular, younger people tend to wait longer to purchase a new home. Now, there's two ways to look at that: they wait longer because they need to spend more time saving money or they wait longer because they want to buy bigger homes or move into more exclusive neighborhoods. And those aren't mutually exclusive. But then there's also the demographic shift toward older Americans generally, which means younger people are competing with older people (with more savings) for homes.
The financial pressures are real, it's just that the sources of those pressures are much more complicated than in the popular discourse.
On a price per square foot basis, home prices have been remarkably stable since 1960s. The share of income spent on housing has also remained remarkably stable. Though prices have ballooned, interest drops considerably, so monthly payments as share of income haven't changed that much.
The way things have gotten worse for people isn't so obvious. For one thing, people have many more choices to spend their money on, such as computers and college. That's created additional pressure on people without the cost of housing itself changing as much as people think, but its a problem someone from 1960 might roll their eyes at. (Hedonistic adaptation?) Then of course there's various income and geographical bifurcations. For example, you can choose to live someplace cheap, but then you're opting out of the highly dynamic and potentially highly lucrative portions of the economy. That's an opportunity cost, but not a literal cost if you're comparing to 1960s lifestyles.