The real estate market has obviously changed dramatically in the last 50 years from the way we buy to how much we spend. But does that just justify inflation or are there other factors at work? Is it actually harder to get a home now than it was in 1970? We look at 20 major ways the housing industry has changed in the last 50 years.
Cost vs. Income
In 1970 first time home buyers were spending 1.7 times their annual income on a home but now we spend closer to 2.7 times. Home prices increase for sure but so does how much we're willing to pay for it.
We're renting longer.
In 1970, most home buyers rented about 2.6 years before buying but in the last couple years that average rental time was over 6 years before buying.
Down payment has decreased.
In the 1970s and even 1980s, buyers were required to put down at least 10% on a home but today the average is only 6% and about 14% for repeat buyers
Increase in house size.
Bigger is always better, right? Well, maybe not but Americans are now looking at homes over 2,600 square feet, whereas in 1970 the average home was only around 1500 square feet.
Starter homes have decreased.
Around the mid-century, starter homes were everywhere on the market, but today that number has decreased 17% EACH YEAR making it even harder for first time home buyers to find a starter property.
The number of new construction homes has dropped nearly 50% from what they were in 1970.
Fewer loan options.
Before the 2008 crash, there were multiple ways to buy a house and now it's just back to a fixed rate or adjustable rate, which is probably better since those creative loan options are what got us into the mess in the first place.
Young adults are not scared to buy.
Buying a home in the 1970s was a huge undertaking and seems scary and downright overwhelming but with so much more information on the Internet, buyers can feel more confident in their purchase and knowledge of the process.
In 1995, only 2% of homebuyers used the internet to look for homes while today that number is 90%! That's probably the most significant number so far.
Fewer homes sold.
The number of homes sold has dramatically decreased over the years. In 2005, there were over 7 million home sales while in 2008 that number dropped to just over 4 million.
Manufactured homes have increased.
In 1970 only 1.18 million people lived in manufactured homes compared to today's 22 million, making this the ideal "affordable" housing.
Millennials are buying.
Millennials are the ones buying the homes now. It was Gen X in 2015 and baby boomers before that.
The invention of Assisted Living.
Before 1985, assisted living didn't really exist and nursing homes were for people recovering or with health problems, but today, active adult and assisted living places are on the rise dramatically.
No more city living.
In the 1950s, people moved out of big cities and into the suburbs and today over half the population of the U.S. lives in suburban neighborhoods.
Rural living has not changed.
Probably one of the only things that hasn't changed is people living in rural counties. In 2000 about 45 million people lived in rural counties and in 2016 that number only had a 3% increase.
The surge of rental homes.
AirBNB and similar websites have launched allowing short term rentals to skyrocket. So much so that many cities are putting restrictions on how these rentals can be managed.
Home Improvements on the rise.
in 2018, people spent over $340 billion on upgrades, more than any other year so far but this is also attuned to higher labor and lumber costs as well.
Appraisers and lenders are no longer able to communicate directly whereas, before the crash, they could comingle information to get the home's valuation that was needed. This actually improved things and people were not buying homes they couldn't afford or spend more on a home than needed.
Increase in homelessness.
Since the 1980s, homelessness has rapidly increased to where there are at least a half a million people living on the streets.
Real estate is risky.
Fifty years ago, buying a home was seen as a great investment but with the housing crash just 10 years behind us, potential homeowners are a little more nervous about pulling the trigger.
How will it change in the next fifty? Let's stick around to find out.