Home prices have doubled the pace of inflation since the 1960s

A recent study by Clever Real Estate has highlighted the significant increase in home prices compared to the rate of inflation in the US since the 1960s. According to the study, home prices have risen at 2.4 times the pace of inflation over the past six decades. This has resulted in the median home price being significantly higher than it would have been if it had simply kept pace with inflation.

The study also predicts that if this trend continues, the median home price will cost 8.4 times the median household income by the year 2050. This would make homeownership increasingly unaffordable for many Americans.

One of the key findings of the study is the stark difference in homebuying prospects between baby boomers and millennials. Homes are almost twice as expensive for millennials compared to what baby boomers were facing in their 30s when adjusted for income. This highlights the challenges younger generations are facing in entering the housing market.

The study also notes that Americans are having to dedicate a larger portion of their income towards purchasing a home. In the 1980s, it took roughly 3.5 years' worth of household income to buy a typical home, but today it takes 6.3 years' worth of household income.

Factors contributing to the surge in home prices include a massive supply crunch, with a shortage of 3.2 million homes in the market. This shortage, coupled with the concentration of new construction in the rental market, has further driven up prices.

Overall, the study paints a concerning picture of the housing market in the US, with home prices continuing to outpace inflation and becoming increasingly unaffordable for many Americans. If these trends persist, homeownership may become even more challenging in the coming years.


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