We’ve been dealing with high inflation in this economy over the last several years, with everything from groceries to new vehicles to construction supplies soaring in price.
But for one item in particular — houses — we’ve seen such sharp inflation over decades that it’s starting to change the landscape of American economic life. What happens in society, and in history, when costs for basic necessities, like shelter and food, shoot up in price?
Let’s start by going back four decades, to 1984. The movie “Ghostbusters” was a blockbuster that year. And the median price of a new home wasn’t so scary: $79,900 in the fourth quarter of 1984, according to data from the Department of Housing and Urban Development.
Since then, consumer prices overall have risen 203%, according to the Bureau of Labor Statistics information and analysis section. Meanwhile, the median price of a new home was $417,700 in the fourth quarter of 2023. That works out to an inflation rate of 423%.
It’s not just the US.
In my home country, Portugal, there is a massive house price bubble (especially in relation to the average incomes over here, which are much lower), so over half of young University students are leaving the country when they graduate, the average age for people leaving their parent’s home is 34 and young adults have children later and have fewer of them, all in one of the most aged countries of Europe.
Whilst I don’t expect all of the same problems in the US, things like delayed parenthood and lower birth rates tend to really fuckup up the Economy over the course of a couple of decades since they lead to falling populations and importing people from countries with lower educational standards doesn’t exactly help a country’s Economy keep high-value-added industries running.
I wonder what all these countries with rising housing costs have in common.