Why have housing costs rose so much in the past decades?

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Why have housing costs rose so much in the past decades?

In: Economics

13 Answers

Anonymous 0 Comments

In the US: it hasn’t gone up everywhere.

Inflation means that a place needs to increase in price to retain relative value, so a place that had the same price as a decade, (or more) is actually dropping in value.

But, adjusted for inflation many markets continue to grow in price. One reason for that is, people who can afford to buy homes tend to be in jobs that are seeing rising salaries, so they can spend more. Another reason is the loosening of requirements to get a loan. It’s faster and easier to get qualified, so more people will buy houses. Low interest rates means you can pay more for a house, but still have the same monthly payment as a cheaper house with higher interest rates. Compared to the 70s and 80s houses being built are bigger and held to higher standards, meaning more expensive. Aldi, there labor price has gone up for the builders.

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