Because homes were still affordable then.
1988 Median Household Income ~27k
1988 Median Home Price ~113k
So a home was 4x annual salary
For 2023 the numbers were ~59k and ~$418k Roughly 7x annual salary.
yeah man… at the time, I was 25 and single and I doubt I made even $12k per year doing oil changes. The house I bought was $33k, and I had two roommates who pretty much covered my <$350 per month house payment. I shelled out a couple hundred more for utilities and could still afford to eat and buy weed…
The problem in that equation isnt the cost of housing, its the low wage growth.
https://usafacts.org/data-projects/housing-vs-wages
The cost of homes in the United States has outpaced wage growth over the past decade. According to the Federal Finance Housing Agency, home prices rose 74% from 2010 to 2022. The average wage rose only 54% during the same time.
It doesn’t really matter which side is out of whack. Housing is unaffordable.
Continuing with the high interest comment that sparked this thread, back then a 10.5% interest mortgage in a typical house was 45% of median income and in 2023 a 6.5% interest mortgage was 53%
If mortgages were still 10.5% in 2023 housing would be 78% of median income.
