Real Estate Prices – Why So High?
by admin on Jan.22, 2014, under Real Estate
It doesn’t take much to get me off on a tangent and yesterday, quite by accident, I saw one of those online images of the costs of various items in 1971.
Cost of a home? $25,200.
The average cost of a home in the US varies a bit by region, but here are some averages for 2013 according to the National Association of Realtors:
In the Northeast US – $224,900
In the Midwest US – $151,100
In the South – $168,700
In the West – $284,400
Now none of us need a calculator to see that this is a monster jump in just over 40 years. I searched a bit more online and found that going back 40 years from my 1971 $25,200 cost to 1931, the average cost of a house was – are you ready? $6,900.
So, for those just into their first cup of coffee, prices from 1931 to 1971 were 4x as high. Prices from 1971 to 2013 were – nearly 10x higher. As far as real estate “trends” go, this is certainly not good news.
And I don’t see it ever getting any better.
What in the world IS going down in price? Nothing I can think of. Regarding real estate, labor and material costs continue to climb, and land to build on is getting more and more scarce so we can quickly guess what supply and demand principles do to the cost of acquiring that.
Hidden in these housing costs today are fees, permits and inspections, and the extra costs involved with financing. Property taxes, insurance, and their increases are always a factor – and as states get more desperate to increase their dwindling revenues to fund their out-of-control budgets, plan on “them” looking to “us” for a few more dollars on everything we do.
My thoughts are, if you are sitting on the fence about a first real estate purchase, do it now or get less later. Do your homework – no one else can do this for you. And in the meantime, if you are in an age group that will be looking to buy in 2054, don’t even try to guess what the price of a house will be by then. Chances are, you’ll guess low.
