Home prices have risen at a significantly higher rate than inflation since 2020, 42% compared to 14%, according to a new report from Clever.
Clever’s new report analyzed how inflation and home prices have increased over the decades, honing in 2020 vs. 2022. The report found that the median home price has risen from $329,000 in 2020 to $468,000 in 2022, while the price of goods rose from $3 to $3.48.
Key highlights:
- From January 1970 to June 2022 median home sale prices rose 1,858% while inflation rose 677%. This means that the median price of homes sold in America has risen from $23,900 in January 1970 to $468,000 now.
- Spending $100,000 on a home in January 1990 would equate to spending $377,724 on a home today, while $100,000 spent on goods and services in 1990 would require $231,081 to get the same amount of goods today.
- Spending $100,000 on a home in January 2020 would equate to spending $142,249 on a home today, while spending $100,000 on goods and services just three years ago would require $113,739 today.
- The average American didn’t receive a raise of $10,000 or more in the past three years, so this likely explains the amount of stress our country is experiencing.
- Honing in on 2022, home prices rose 10.3% while inflation rose 6.3%—a four percentage point difference.
- The increase in home prices outpaced inflation by 3.7% overall in 2022. However, between July 2022 and January 2023, inflation outpaced housing prices by 2.5%.
- Marginal decreases in home prices aren’t that thrilling because the median home price remains expensive at $468,000. Additionally, a 6.3% inflation rate is still a sign to many cash-strapped Americans that the cost of living isn’t going down anytime soon.
Major takeaway:
“The value of homes has increased exponentially over the past three years as demand outpaced supply. As a result, homeowners were in a great position to gain equity as prices inflated over time,” said Sam Huisache, a content writer for Clever and author of the report. “However, inflation has also made it difficult for potential buyers to afford homeownership as lenders have increased mortgage rates and tightened lending standards. As of date, the average national mortgage rate is 6.97%—compared to 3.58% in March 2021.”
“For the past few months, American home prices have steadily declined. Despite inflation finally cooling, Americans are still stressed about their finances. We’ve found that 73% of Americans experience stress and anxiety over money,” continued Huisache. “Recognizing that average Americans can do very little to influence their cost of living, it is more important than ever to understand the relationship between inflation and home prices.”
For the full report, with additional data, click here.
