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Friday, May 06, 2022 9:53:34 PM
Jan 31, 2022, the ratio was 7.72. It's higher now. We're not in a housing bubble, pay no attention to the Zillow person behind the curtain.
Home Price to Median Household Income Ratio (US)
Interpretation
Historically, an average house in the U.S. cost around 5 times the yearly household income. During the housing bubble of 2006 the ratio exceeded 7 - in other words, an average single family house in the United States cost more than 7 times the U.S. median annual household income.
The Case-Shiller Home Price Index seeks to measure the price level of existing single family homes in the United States. Based on the pioneering research of Robert J. Shiller and Karl E. Case the index is generally considered the leading measure of U.S. residential real estate prices. The index has a base of Jan 2000=100 and is multiplied by 1800 in order approximate the Average Sales Price of Houses Sold for the United States.
According to Mike Maloney this ratio is heavily influenced by interest rates. When interest rates go down the affordability of a house goes up, so people spend more money on a house. Interest rates have now been falling since 1981 when they peaked at 15.32% (for a 10-year US treasury bond).
Data Sources
Recent data
Federal Reserve Bank of St. Louis: S&P/Case-Shiller U.S. National Home Price Index
Federal Reserve Bank of St. Louis: Median Income since 1983
Historical data
census.gov Median Income from 1947 until 1965
DaveManuel.com: Median Income from 1967 until 1983
Online Data Robert Shiller: Historical US Home prices until 1983
https://www.longtermtrends.net/home-price-median-annual-income-ratio/
Home Price to Median Household Income Ratio (US)
Interpretation
Historically, an average house in the U.S. cost around 5 times the yearly household income. During the housing bubble of 2006 the ratio exceeded 7 - in other words, an average single family house in the United States cost more than 7 times the U.S. median annual household income.
The Case-Shiller Home Price Index seeks to measure the price level of existing single family homes in the United States. Based on the pioneering research of Robert J. Shiller and Karl E. Case the index is generally considered the leading measure of U.S. residential real estate prices. The index has a base of Jan 2000=100 and is multiplied by 1800 in order approximate the Average Sales Price of Houses Sold for the United States.
According to Mike Maloney this ratio is heavily influenced by interest rates. When interest rates go down the affordability of a house goes up, so people spend more money on a house. Interest rates have now been falling since 1981 when they peaked at 15.32% (for a 10-year US treasury bond).
Data Sources
Recent data
Federal Reserve Bank of St. Louis: S&P/Case-Shiller U.S. National Home Price Index
Federal Reserve Bank of St. Louis: Median Income since 1983
Historical data
census.gov Median Income from 1947 until 1965
DaveManuel.com: Median Income from 1967 until 1983
Online Data Robert Shiller: Historical US Home prices until 1983
https://www.longtermtrends.net/home-price-median-annual-income-ratio/
Kleptocrats: a ruler who uses political power to steal his or her country's resources.
Kleptocracy: government by those who seek chiefly status and personal gain at the expense of the governed.
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