Just a a different way to look at home pricing over time. Source:
Average house price vs average hourly wage
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Yes. 2020 to 2024 was a very inflationary time.
Its getting fixed, now.
One of the Fed’s favorite indicators—the 5-year forward inflation rate—is sitting near multi-year lows at 2.3% for CPI, translating to approximately 2% for PCE, exactly at the Fed’s target. Despite political rhetoric around tariffs and inflation, the data tells a clear story: long-term inflation expectations are stable, providing the Fed room to ease without risking a resurgence in inflation.
https://resources.wisdomtree.com/we...ommentary&utm_term=read_now&sfmc_id=115640163
Its getting fixed, now.
One of the Fed’s favorite indicators—the 5-year forward inflation rate—is sitting near multi-year lows at 2.3% for CPI, translating to approximately 2% for PCE, exactly at the Fed’s target. Despite political rhetoric around tariffs and inflation, the data tells a clear story: long-term inflation expectations are stable, providing the Fed room to ease without risking a resurgence in inflation.
https://resources.wisdomtree.com/we...ommentary&utm_term=read_now&sfmc_id=115640163
There likely both skewed in the same direction, so the point of the chart is the same - change over time.
I would guess the primary reason is that worker hours are only tracked on average. I have seen data sets for median household income, but not median hourly wages. Average hours is a standard data set from the BLS. It accounts for all private sector, including higher overtime pay, and is also used to calculate things like worker productivity. https://fred.stlouisfed.org/series/CES0500000003
Obviously I did not do the chart but that is always the debate around here. I honestly don't see the concern if your just tracking data over time - not trying to equate some absolute value of a single variable, average or median. The relative change should be reasonably close.
In the year 2020 in Denver the 'Average person " had to make $100,000 to afford housing. Now on 2025 it's $176,000 per year. So in 2025 you needed to have a $25k per year income to live here.
It would be really interesting if it were adjusted on square foot basis because homes are still larger than in the past.
https://eyeonhousing.org/2024/05/new-single-family-home-size-decline-continues/
My concern was the skewing that can happen with using average--the average 401k is bad, but the median is worse. Link.
I recall in 2016 that there was a report that came out about median house price to median income--in 1950, the ratio was 2x. But in 2015 it was 5.1x. And climbing. Can't find that report but did find this. Link.
Of course, even this is misleading, as we know this is wildly dependent on location--but going back to your point, it tends to "average" out as higher cost of living areas have higher income, and vice versa.
I recall in 2016 that there was a report that came out about median house price to median income--in 1950, the ratio was 2x. But in 2015 it was 5.1x. And climbing. Can't find that report but did find this. Link.
Of course, even this is misleading, as we know this is wildly dependent on location--but going back to your point, it tends to "average" out as higher cost of living areas have higher income, and vice versa.
They don't mean the same thing.
If you look at where most of the money is made it tends to skew the higher end much more, and therefore the average run up a lot faster than median. Median skew the demand and supply way more but of course still not the whole picture. It is likely the middle 50%'s income vs middle 50%'s housing cost that matters more.
This chart also doesn't factor in interest rate and payment, so yeah, not that useful. Now if you compare that to gold price per oz then you probably get a better picture.
I grew up in a 1200 sq ft house. My first house was 1000 sq ft. My current house is 1600 sq ft.
All of the new construction houses going up around here are 2500 to 3500+ sq ft, single family homes. These are all quite expensive homes. The construction companies are in it to make money, and there isn't as much money in the smaller homes. The city gives lip service to affordable housing, but continues to push forward these large house communities because of the higher tax base it creates.
A single family of 4 does not need a 2500-3500 sq ft home. It is a luxury that people want, so that's what is being built.
Comparing income to a home in the 1000 to 1500 sq ft range would show much more favorable ratios. The problem is that there aren't enough of the smaller homes to go around.
All of the new construction houses going up around here are 2500 to 3500+ sq ft, single family homes. These are all quite expensive homes. The construction companies are in it to make money, and there isn't as much money in the smaller homes. The city gives lip service to affordable housing, but continues to push forward these large house communities because of the higher tax base it creates.
A single family of 4 does not need a 2500-3500 sq ft home. It is a luxury that people want, so that's what is being built.
Comparing income to a home in the 1000 to 1500 sq ft range would show much more favorable ratios. The problem is that there aren't enough of the smaller homes to go around.
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How can the effects of tariffs that are a few weeks old, possibly be figured in any "long-term" projections?
No expert can even guess what they will be next week, or next month.
4WD
$50 site donor 2025
10 years ago I saw people taking out 30 year loans - for a 4000 SF box in the sun - you know, for DINKS n Dog - bcs cheap rates and labor made this possible. But now insurance, PM, utilities, fees, and taxes are coming home to roost - especially if it took two paychecks to pull it off … One HVAC system away from a train wreck
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Top 1% earners materially skew the average earning numbers. I'm not sure if their housing materially affects the average home price, though.
I am not a fan of short term, and incomplete data. It can really skew the perception. Even so, this is kind of eye-opening and seems to make sense.
I did a study on inflation a while back. Using home prices and vehicle prices along with insurance costs (a monthly expense for most) inflation is way beyond the CPI numbers.
And no, it's not getting 'fixed now'. Insurance is up another 40% this year.
I did a study on inflation a while back. Using home prices and vehicle prices along with insurance costs (a monthly expense for most) inflation is way beyond the CPI numbers.
And no, it's not getting 'fixed now'. Insurance is up another 40% this year.
in the very Rural, farming township where I live, the MINIMUM allowed size for construction is 1300 sqft. just large enough to rule out Trailers.
What I am not seeing is the house payment.
Never mind the price of the house what is the payment?
The house price is only part of the equation. The other part would be the actual interest rate.
I’m unsure if these charts take that into account.
The reason being is they only mention price and not payment
The "affordable" housing is not a 1200 sqft SFH. Nobody build something like that today because they can always buy an old home like that and fix what is broken, or they get teardown rebuild into larger home. People live different lives now, they work from home, they have multiple things going on, and they can afford to do it with today's financing. It doesn't cost much more to make the sqft bigger because the wall is based off the parameter more than the sqft, so one increase linearly to the perimeter whereas the other increase by square, that's 1 extra order of magnitude in revenue vs cost.
Plus, you can always roommate with others if you want less space and share the cost.
Want a 1200 sqft home? There are plenty of condos and apartments to buy from.
Square footage "need" is climate dependent IMO. In harsh, long winters more space indoors is nice to have given you are stuck inside for months on end. In warmer climates you can make do with less since you have the outdoors as an extension of your living space. My house is 2400 sq.ft. for 3, which in the winter I really appreciate. We could make do with half of that in the summer.
Roommates are great when you are single, not for families. A single family home provides much more freedom and other benefits than the identical home in a condo or apartment format can't provide...noise concerns bring primary as well as owning more property, even if it's a postage stamp yard.
Our first house was only 700 square feet... I think it was 690 in the ad. Only 2 bedroom. On one hand, it was great--during the Great Financial Crisis, as it was cheaper than rent by then, and only cheaper as time went on. Hard to unload though. And I bought it as a starter home, and went on to have a son and a daughter. It was good for them to bunk together when young, but, I took a bath when I finally sold.
Have a 1,900 sqft house now, which is palatial by comparison. Then again, it's a ranch, so 2x that with the basement. Love it. Well, 'cept for heating and cooling... but as mentioned, in the cold climate of NH, rather nice when stuck indoors.
Have a 1,900 sqft house now, which is palatial by comparison. Then again, it's a ranch, so 2x that with the basement. Love it. Well, 'cept for heating and cooling... but as mentioned, in the cold climate of NH, rather nice when stuck indoors.
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