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The Cost of a Home Is Now 20 Times Higher Than 1970
But we’re only earning 5 times more…the numbers don’t add up
The raw numbers: Homes
In 1970, the average cost of a home was $17,000.
In 2022, the average cost of a home is $348,000.
That is 20 times higher than in 1970 (an almost 2000% increase.)
Back then, banks would extend mortgages up to about 2 times your annual salary, so someone making the national average of $9870, could easily afford a home costing $17,000.
Using those metrics, to afford a home today, a family would need to make about $175,000 a year — which accounts for only about 5% of the population. And while banks are more discriminating because of the housing bust of 2008, they routinely extend mortgages that are 3, 4, or even 5 times a family's annual income.
Were banks too conservative 50 years ago? Are they too liberal now? It can’t be both! Consider that careers were “safer” 50 years ago, with more unions and pensions and people staying 30 years with a single company. Today’s “gig” economy allows for more flexibility but less job security.
Telling your bank you were unfairly “canceled” or fired because of a controversial Twitter post, won’t satisfy the mortgage.
