Healthcare expenditures only makes up 6.3% of the average income of an American household. Education only makes up 1.8%.
Vehicles and apparel alone, without even breaking out any other tradable sector, make up the same percent of household expenditures as healthcare and education.
Housing makes up 25%. But the cost of housing, as measured by the median inflation-adjusted cost per square foot of a new house has actually fallen by 8% since 1992.
> But the cost of housing, as measured by the median inflation-adjusted cost per square foot of a new house has actually fallen by 8% since 1992.
That's a relatively meaningless statistic given that new houses don't account for a significant subset of the housing supply.
A better measure of true housing costs is BLS's annual Consumer Expenditure Survey [1], which shows that just from 2013-2018, average annual housing expenditure has risen from $17148 to $20091, an increase of 17%.
Using that same source shows that after tax incomes increased from $56k to $67k over the exact same period. So housing expenditures actually grew at a slightly slower rate than income (17% vs. 19%). That proves the opposite: housing is actually become more affordable.
Moreover, according to the source shelter only made up about half the increase in expenditures in the category. Expenditures on shelter grew even slower than housing as a whole, 16%.
From the source, Americans spent 32% more on furniture and appliances (including a whooping 50% increase on major appliances), 28% more on housekeeping services, 30% more on their cell phone bill (which is weirdly part of of the housing category), 23% more on household products, and 20% more on their water bill. In other words Americans are splurging on smart fridges, maid service, mobile data plans, organic cleaners and long showers.
That doesn't really sound consistent with the story of cash-strapped workers struggling in an overpriced housing market. That sounds a lot more consistent with the macroeconomic data, which is tells us that since 2013, the economy has been booming and unemployment is at post-war lows.
> So housing expenditures actually grew at a slightly slower rate than income
The point was that new home construction cost (the stat you used) isn't of significant magnitude to be relevant to overall housing price trends. I wasn't addressing price to income ratio.
But regarding that, averages can hide growing divergences between incomes and home prices. Instead consider the median home price to income ratios over time:
It is also correct to observe that the divergence is most strongly correlated to large metropolitan areas, but that doesn't make it any less of a problem, since that's where most people live, and where most people are moving.
Thanks for linking that, very interesting. But I think if you dig into the report cited you'll find that it's not as simple as looking at the ratio of home prices to incomes. The report you linked cites:
> In fact, the monthly payment for the median single-family home purchased in 2017, assuming a 30-year loan with a 3.5 percent downpayment at the average interest rate, totaled $1,620 in real terms—slightly below the $1,650 averaged in the 30 years from 1987 to 2016, but more than $900 below the real median in 1981 when interest rates were at an all-time high.
Moreover that doesn't even take into account the rising square footage or quality of the modern housing stock compared to thirty years ago.[1]
In terms of the relative comparison between high and low cost metros, the relevant division isn't large and growing metros. The report finds that two thirds of the 100 largest metros have price to income ratios below 4.0. Add in those outside the major metros, and the sizable majority of the American population lives in low cost housing markets.
Figure 19 of the report also shows that high-cost states like California, New York, New Jersey, Massachusetts and Hawaii have strong net outflows of young people. Whereas predominately low-cost states like Texas, Florida, Georgia, Arizona and Tennessee have strong net inflows.
Since 2010, high cost major metros New York, LA, and Boston have grown significantly slower than the US population. San Diego and San Francisco have barely outgrown the US as a whole. Miami, Seattle, and Denver are the only high-cost major metros to grow faster than the rest of the country.
Can you please make your point directly instead of snarking about regulation instead? It contributes little to the conversation if your don’t put forth any arguments or discussion.
I am not a fan of making people guess what the point is, but I thought that dantheman's point was actually pretty clear. It becomes reasonable to suppose that government intervention and regulation play at least a role in the unaffordability crises in education, housing, and healthcare.
I think that's a consequence of pulling wealth from the future into the present to counteract the loss of wealth due to decreases in the price of labor due to increase in supply of labor from other countries and decrease in demand of labor due to automation.
Question is how far into the future are we going to keep pulling.
