We’ve been dealing with high inflation in this economy over the last several years, with everything from groceries to new vehicles to construction supplies soaring in price.
But for one item in particular — houses — we’ve seen such sharp inflation over decades that it’s starting to change the landscape of American economic life. What happens in society, and in history, when costs for basic necessities, like shelter and food, shoot up in price?
Let’s start by going back four decades, to 1984. The movie “Ghostbusters” was a blockbuster that year. And the median price of a new home wasn’t so scary: $79,900 in the fourth quarter of 1984, according to data from the Department of Housing and Urban Development.
Since then, consumer prices overall have risen 203%, according to the Bureau of Labor Statistics information and analysis section. Meanwhile, the median price of a new home was $417,700 in the fourth quarter of 2023. That works out to an inflation rate of 423%.
Zoning was the other driver that made that happen. When developers are required by law to buy a relatively large, expensive piece of land to put a single house on, they have to make the house big and/or luxurious in order to be able to sell it for enough to make a profit.
If you let them subdivide into smaller lots, or build multiple units on the lot, they could charge less per dwelling unit.
(Of course, suburban governments have historically refused to do that because then “the wrong people” (read: blacks, who are poorer than whites on average because of previous institutional racism) would be able to afford them.)