It’s been no secret that the economy over the last two years has been, well, more than interesting. From the heavy rate of inflation to, say, the computer chip supply chain problems that has led to used cars being. worse value than new ones – and the housing market absolutely going gangbusters – there’s a lot economically that’s been helping, hurting, and reshaping the economic reality that American families live through. For example, inflation in the store and at the pump is making it harder and harder for us to cover our basic expenses. At the same time, the cost of housing – if you own a house – means that your assets there are incredibly valuable. And new data from The Wall Street Journal and Zillow has found that for the first time ever, your house probably made more money than you did at your job this year. Here’s what you need to know.
According to Zillow Group Inc., the value of a typical home in the US, called the Home Value Index, rose dramatically in 2021 to $ 321,634. The home value index increased by $ 52,667 from the previous year. And when the home value index is compared to the average pre-tax wage and salary income of a full-time worker in the US, which is approximately $ 50,000, we get a clearer picture of how out of control the housing market has become.
Our homes made more than we did – and that’s never happened before.
“The people who are winning the housing bids, typically, are folks who have higher incomes or have the equity from their previous home that they’re able to put forward,” Nicole Bachaud, an economist at Zillow told The Wall Street Journal. “That’s definitely a big challenge, I think when we consider first-time buyers, renters, people who do not already own a home and aren’t really benefiting from that equity.”
That figure is an average across the US, but for some areas, the home value index far exceeded the average pre-tax wages. For example, in San Diego, the home value growth minus the median income was $ 105,790. San Jose’s was $ 136,277. In Boise City, it was $ 74,979, and the figure was $ 87,254 in Urban Honolulu.
Not every area across the US has seen the same growth – but there was still an increase. “Metropolitan areas with the lowest home price appreciation relative to median salaries were Detroit, St. Louis, and Baltimore, though even the smallest home value growth among these metros, in St. Louis. Louis, was still higher than $ 27,000, ”Zillow Group Inc., points out.