Comment by AnthonyMouse
6 hours ago
> The share of income people spend on housing has been very stable over 40 years
That's a misleading metric for two reasons. First, "people" includes all the people who bought a house decades ago before the prices went up, and correspondingly paid the old prices instead of the current prices. And second, it assumes that if housing becomes more expensive what people all do is pay more for housing rather than being unable to afford it and then having to take a longer commute to access housing they can afford, live with their parents, become homeless, etc., which negatively impact the amount or type of housing they get instead of the amount they pay for it.
Meanwhile between 1984 and today median income increased by ~290% while median new home prices increased by ~425%:
https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MEHOINUSA646N
And that's with the gap having reduced a bit in the last couple of years, since home prices have declined slightly since the peak in 2022 while median income continued its usual trend.
This is a good point. Also, anytime there is a discussion about inflation, there should be a timeline included.
Both inflation and wages have not gone up uniformly since they started being tracked. We all know the Trump/Biden covid inflation was bad, but by the end of Biden's term wages had mostly caught back up. The second Trump administration's policies reversed that trend.
Housing in particular cratered in some areas during the GFC, but then went wild especially around the covid.