ST. LOUIS–New research shows that since 2013, home prices have increased two times faster than inflation.
In other words, the median home price is up 63% over the last decade, while overall inflation has increased 31%, according to the analysis released by Clever Real Estate.
“If home prices had merely kept pace with inflation, the median home would cost only $177,500 today — compared to the $431,000 it actually costs,” the company said. “Despite Americans' fear of rising inflation, home prices have historically risen much faster. In the last 10 years alone, inflation has increased 31%, while home prices are up 63%.”
Clever noted homeownership has always been costly, “but historically, it has never been this costly. In the 1980s, it took about 3.5 years' worth of household income to purchase the typical home. Today, it takes 6.3 years' worth of household income,” the company said.
To learn more about the relationship between home prices and inflation, Clever Real Estate said it conducted a comprehensive analysis of national, statewide, and citywide home prices over time based on data from the Federal Reserve, the Bureau of Labor Statistics, and the Zillow Home Value Index.
Key Findings
Among some of the other key findings:
- Home prices today are 24x higher than they were in 1963, while inflation is 10x higher.
- Millennials pay nearly twice as much as baby boomers did for homes in 1985. Today, the typical home cost is equivalent to about 6.3 years' worth of median household income, compared to 3.5 years in the mid-1980s.
- For homes to be as affordable today as they were in 1985, the median household would need to earn $134,000 per year — nearly double the actual median of $74,580.
- By 2050, the median home would cost 8.4x the median household income if the current trajectory continues.
- For the first time in 12 years, inflation rose faster than home prices in 2023.
- Hawaii has seen the largest rise in home prices among all states since 2000, with the typical home value quadrupling to $831,808.
- Louisiana has seen the smallest price increase, though prices are still 86% higher than in 2000, up to $194,453 today.
- Of the 50 largest U.S. metros, Miami has seen the sharpest spike in home prices. The typical house in Miami is 4x more expensive today ($472,711) than it was in 2000. \Cleveland has seen the smallest rise among the 50 largest metros — but there's still been an increase of about $90,000 since 2000, with the typical home now valued at $211,496.
For the full survey, go here.
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