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Rachel Does Math – Flashback Fridays

Additions to the original post are made in pink 🙂

So according to my math (which, in interest of full disclosure, could be faulty) housing costs have gone up like CRAZY in the last 46 years!

My Source Of Information

I know what you are thinking. You are thinking “Well of course they have, its called inflation you idiot. We also get paid more now.” This is of course true. But this is where the math came in.

In 1964 the average house cost 217% of the average annual income.
In 1986 the average house cost 399% of the average annual income.
In 2009 the average house cost 590% of the average annual income.

Seeing as how I would like to be a home owner someday, I feel like this is horrible news. If I were already a home owner this would be awesome though! Except I would have probably done something stupid like refinance it to pay for a vacation or something and lose all the equity I built in it. Plus I would have had to buy a house the year my mother was born to have gotten the best deal, which unless I can find a tricked out Deloreon is just not going to happen.  I have also recently found out that interest rates in the 1980’s were INSANE!  Like seriously 18%, meaning that homes were probably REALLY expensive still until you could refinance a few years later.
My house

Strangely enough rent has stayed pretty close to exactly the same. In 1964 it was 22% of average income, in 1986 it was 20% and in 2009 it was 20%. That makes it infinitely (okay not really but I don’t know how to do the math to figure that one out) easier to rent a dwelling than buy a dwelling. Making it harder to put money into your own pocket, through building equity, than into a landlords. Making it harder to eventually retire.  I now own a house!  YAY!

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