I looked at historical inflation adjusted home prices back to 1953.
The low during that period was around 159k, the average price stayed at 175k,
until after the mid 80's, the housing bubble topped in 2006 around 275k median
home price. We are now at around 300k, the problem is that wages have only gone up
for the top 5% since the peak in 2006, that's why there is a lot of demand for high end
expensive homes now. Wages have been flat for the rest since 2006 but we are way above
2006 bubble levels, mortgage rates are lower from 6.14% to 3.15%, but this is as low as
they will ever be unless the Fed goes to negative rates, not likely, and they will probably go
up in 2023. So, interest rates, not wages are what is keeping the housing market going,
with 50 years of stagnant wage growth for most, is that likely to change? Probably not.
What if the housing market tops soon and returns to the 175-200k level for decades?
I guess homebuilders can always start building 150-175k homes again, there is just not
much profit in those for them now.
Edited by CLK, 26 September 2020 - 07:34 PM.
