In recent years, owning a house has become a lot more than just having a place for your family to live. It’s a status symbol, a way to make passive income and, increasingly, an unrealistic dream for younger generations. Washington state Congressional candidate Rebecca Parson crunched some numbers and found that it hasn’t been this hard to afford a house in the U.S. since the Great Depression.
Here’s how: During the Depression, the median annual pay was about 22 percent of the cost of a home. In 2019, it’s only 14 percent of the cost of a home. In other words, it was easier for the average American to afford a home during the Great Depression that it is today, based on their pay relative to the cost of your average house.
The math checks out. In 2019, the median annual earning for women was $47,299. For men, it was $57,546. Averaged together, that’s about $52,423.
The cost of the average home in the same time was $377,700. That is about 14 percent of the median salary.
There are other factors to consider here but there is no version of that which is sustainable. Housing is in high demand and low supply, meaning homes are appreciating at a record rate right now. Americans who own their home have generated a remarkable $6 trillion in housing wealth over the last two years. That’s great news if you’re among the 65 percent of Americans who own a home. But if you don’t already own a home, you’re seeing any chance of buying one slip out of reach at a rapid pace even as inflation, soaring rent costs and stagnant wages eat away at what wealth-building opportunities they do have.
In other words, the wealth gap, which has been growing for decades, is getting turbocharged by the current housing market. “There’s a rosy picture and a not-so-rosy picture,” Emily Wiemers, an economist at Syracuse University, told the New York Times. “The flip side is pretty troubling. There’s this set of kids whose parents don’t own a home and so didn’t see this increase in wealth, and also whose parents may have seen declines in income.”