What’s wrong with the economy? Using housing prices as an index, I made these calculations:
The last house I bought was in 1974. I sold it a couple of years later. It was a brand new, small, three-bedroom house with a garage in a nice neighborhood. I bought it for $24,500. In 1974, the median income in the U.S, was $11,446. That same house today (based on prices I’ve been looking at in the Real Estate section of The Bee over the last couple of years) would be about $240,000 in Dinuba.
The median income in the U.S. in 2016 was $58,721. So, on a simple compound-interest basis, the cost of housing has risen 5.45 percent each year in the last 42 years, while the median income has risen by only 3.9 percent each year. For every dollar of income in 1974 it would cost you $2.14 to buy a house compared to $3.88 in 2016.
That means housing prices have gone up 1.8 times as fast as wages. Half the country makes under $58,721 – not enough now to buy a $240,000 home.
Remember when they used to build houses the average working man could afford?
Jim King, Visalia