Historical housing prices. Easy to view chart
Historical housing prices, we’re going to go ahead and look at a chart because who doesn’t like a good chart when it relates to real estate and what we’re going to do is we’re going to show you why this feels different than it did in the past. We’re going to talk about some big trends that we see here with younger people moving back home, but not so young.
They’re in their thirties and forties and they’re moving back home because they can’t afford things as prices are going up. This is really happening. And then we also have people cohabitating together for a little bit longer and kind of like you’d think about, you had a college roommate.
It’s almost the same thing as an adult roommate and then put their buying houses together. I don’t know. And then we have other younger people who are starting to move out because they kind of caught their groove.
And we have like these small rental homes going on and they’re not apartments, but the rental homes, and there’s just a lot of items going on. So let’s go ahead and share this chart and start to discuss it. All right. So here’s our chart. And if we take a look right here at the middle of the graph, you’re going to see zero percent. So zero percent is a line that kind of goes along from the left to right.
And anything above that line is a positive and that’s going to be housing prices going up. Then we have anything below that line. We’re going to see that line is most notably in two thousand nine and then you’ll also see it in 10, 11 and 12. So you’re going to see it kind of in the beginning over on the left hand column. Ok. And so those are housing prices going down by a certain percentage and then obviously above is the ones going up.
So what we’re going to see is in two thousand nine, we had a housing price overall that went down by more than 10 percent. So we had negative housing prices or housing growth or shrinkage in values, right? So it went down by more than 10. Then it kind of went back up and it was a little bit negative.
So it was turning more positive than it was before, but it was still negative over the last year. So there was a loss in a loss, in a loss. But most great, the most great losses were in two thousand nine, according to this graph. Then what we see is it went up in twenty fourteen, roughly right.
So then we had we recaptured all of this negative. So if we essentially took those two numbers and kind of like swapped them and put them together, we would be almost at zero growth for the years between two thousand nine. And if we looked out all the way, maybe to twenty fifteen, if we just like, you know, took that average there, we’re at like essentially zero.
So it’s really crazy that you would go all the way from two thousand nine all the way out with essentially no growth, right? So we kind of had this pent up, well, deflation really, because we didn’t have inflation in housing prices and housing prices over a historically long period of time. Keep up with inflation, and that’s what it really is. So housing prices and inflation pretty much move in lockstep.
If you look at it over a 20, 30, 50 year time frame, they’re going to be about the same as inflation over that extended period of time. Now there’s anomalies that we have things that go on that cause more extremes, as noted with two thousand nine fourteen and then what we’ve seen recently.
So we have this other up. So what I showed you before in the early years is we kind of had this up in the down and then if we average them out, they’re about the same now. If we kind of take a look over after that in twenty sixteen twenty seventeen twenty eighteen, we kind of started to get back closer to housing prices, keeping up with inflation plus maybe just a little bit to kind of make up.
So if we looked at inflationary things being typically three percent and we’re having four or five and six percent growth, then we were, you know, exceeding that by just a little bit kind of making up, but not fully right. So housing prices had kind of stagnated for that whole period of time. Now we have seen them go up because people’s use of the homes has greatly changed.
So if I’m looking at the graph and I see this huge op that’s going on right now and then you see like this minor down, but that’s like so short of a time frame. I don’t really know how to analyze that if it’s just seasonally adjusted and it happens to be just a December thing. But we kind of see it going on right now that housing prices seem to have stabilized and going up again.
We have multiple offer situations all over the place and prices going above market and all of that. So we’re establishing new highs again, showing that it’s likely to be that same type of number again this year as it was last year. So I don’t. See that we have this big up now.
And that is necessarily coincided by a huge down. Ok. And the reason for that is I see that things have shifted. And when I talk about that, you know, a house is not so fungible, you can’t really change a lot of things within it. You can paint the wall pretty easy, but you necessarily can’t like move walls and add to it and make it a bigger structure or a smaller structure, specifically a smaller structure, easily.
Right. So they’re kind of like a fixed asset once you put it out there. Now the items that I’m specifically talking about on why this feels different is because we have several things that we’ve kind of seen going on. And I believe that Kelly Milligan hit on this during blastoff and it was reported back to me through my wife that there were several things going on. So he pointed to a lot of younger couples.
Now everyone has their age that they are so younger could be anything to most people, right? So there’s a lot of 30 and 40 year olds that had moved out of the house establish themselves, but were maybe boomeranging back to the home.
And after being successful in being out, they now can’t afford whatever that is. Their life changed and maybe due to pressures or they wanted to save. Or maybe the person that had the home, like their parents, had more pressures and didn’t have as much stuff, right?
Put the combining of two households to take care of just the needs of one home has happened. So this is going on with people moving back and kind of cohabitating together, possibly with their parents and most of these situations. So when we have that going on now, the home has to change a little bit. So over time, if you thought about that, would you live in that same place that you grew up in if you brought your kids into this situation now in your 30 and 40 years old?
So if you kind of thought through yourself where you’re at and then ultimately you’re like, Wow, that house would have to be decidedly different if I was going to be there for a period of time. Right. So you now think about how the house would function, and it’s possible that you would want something decidedly different.
So thus we kind of have a demand for a different product that’s not there. And that’s about what we’ve seen is we have a housing shortage as far as quantity goes, but also in quality and in type and in function, in how they work.
So we definitely have an issue with not enough one storey homes. Ok, so as the aging population happens, people don’t want to go upstairs and it becomes more expensive for just the first floor. So that’s an example of a housing problem that we have that we have a shortage of in the type and function of home.
Ok, so less one stories. But now the homes are going to function different because you would have the parent, you know, or the grandparent in the situation living in the primary bedroom. But all of a sudden, now you have kids and grandkids moving back where you might need a bunk room for them to be in. I don’t really know, and you need a secondary primary bedroom, probably separate it separated in the home.
So that’s a totally different function. And what I kind of see building up here is huge demand for a different type of home. Ok. And that also goes to the same type of thing. If we have younger people who are now moving out of the home, but they can’t afford it on their own, so they’re cohabitating with another adult.
Ok, maybe not like in a relationship type thing, but where they want to have two different things, almost the same exact thing that I was kind of talking about where you kind of have two primary bedrooms and primary suites functioning a little bit different.
But then all of a sudden they need to get a, you know, like an office and a living space over here and another one over here. And you know, you don’t want to have one person having all of this and the other person having like a smaller version of it. So I kind of see the function a little different.
And then we have a third anomaly that’s kind of going on. So if anyone has been up north of Custer, just north of three eighty one road up there, lac in the name of it, but I think it’s called the mansions. And the mansions are maybe many mansion type apartments, but they’re single.
The majority of them are single storey and they’re kind of like duplexes. I think there’s two of them attached to each other, so there’s two of them by each other, but they’re smaller units, so they might be a thousand square foot like a two, like a two bedroom apartment would be. But now they’re not in a large building, right?
And combine, they’re they’re kind of making this. Own house, but splitting it, but then putting apartments instead of selling them, they’re leasing them. Ok, so people want to function like they’re homeowners, but they’re actually leasing because they don’t have these things, so it’s a different form.
So all of a sudden, if these catch on and I do highly encourage you to go up and take a look at them and you can kind of see what’s going on here. So go north on Kuster after three, go one more street and forgetting what that one is. Take a right. Go down just a little bit and then it’ll be on your right.
And I think it’s the mansion, something it’s a mechanic. It’s in this unincorporated area and like, they’re allowed to do some crazy stuff in there and sometimes things happen. Ok, so take a look at that place, but see how this is functioning and see how you could understand and just take a look. Take a take a ride through. Go into the sales center and see what’s going on right. But within this space, we’re seeing something decidedly different than what we had seen in a traditional apartment complex.
And in doing this, you can see how that’s also going to shift. Then we look at other things like Are people going to move into office buildings? Because if no one’s going back to the office, what in the world is going on there with office space? How is that going to exist in the future? We have tons of it. And if we’re truly able to function for more of what we want, doesn’t the home change?
Doesn’t the office change doesn’t the office that doesn’t need the space anymore, but we have tons of it change into like some luxury condos or something where you I don’t know, right? Kind of like in New York City approach, is that going to happen to some of the stuff at legacy? I’m not sure, but just kind of think through these things.
And it’s not necessarily supply and demand overall for housing, but I think there is going to be an issue with supply of very specific types of homes with features and functions that people desire in the current market. So imagine now if we have all these different properties that are not demanded.
How does that change? Right. So we I think we have this paradigm shift of what’s going on, and it’s not just zooming from home and working from home. These are kind of like bigger ships with that kind of go on with generational differences. And it’s kind of a generational real estate shift that’s going on more so of the cohabitating and what’s going on there, just trying to bring some of these items up so you can think and ponder on what’s going on and kind of foresee these things.
Good ideas to be able to talk with your clients about to have them look at and kind of understand. And if you are looking for something new, right, we’re kind of looking at right behind us.
Here is a one story. This is the this is the back of a home. You can kind of see the pool behind us over here and what you notice, it’s mostly a one story. And then there’s like some small bonus space upstairs on the on the other side. So is this kind of the future of what we’re looking at more of a sprawling one story. So I didn’t know what your thoughts are on this.
I’d like to hear your opinions as we kind of look at this and see how it functions for you, but understand some of these trends because I believe they are real. And I only see real estate continuing on this trend and then it exacerbates that issue of affordability of people. So then all of a sudden things start changing like you’re going to have to drive further and new areas open up. But now, if new areas are opening up, it’s going to take a long time to build out.
I just really don’t see this changing for the foreseeable future, right? And I was on the train that we’re going to have some correction in what’s going on as interest rates started to go up and as things changed, now, you know, we kind of can’t always have this perpetual going up and that kind of has to stop and it’ll be a little bit of pressure as interest rates go up. But people seem to have enough capital right now that they would be putting down that extra money right on the properties. And because right now they’re going above and beyond and they’re bidding above and putting additional money down.
So they’re effectively going above kind of this 20 percent down that they’re putting down in most situations. And if they’re doing that, then can’t they really just put more money down and actually afford a higher interest rate that’s going on? There’s a lot of pent up savings in a lot of demand. So for the foreseeable future, I may have been wrong that I predicted in the past that we would see a slowdown, you know, come next fall is when I had initially.
Did the next slowdown, but with this, all of this extra demand that’s kind of cycling behind here, I kind of see the same thing going on and I’m going to probably modify that forecast going forward. So that’s all I have. That was a lot of discussion about historical prices, the charts and taking a look, but more of the pent up demand for very, very specific homes. Give me a call. If you have any questions, we’ll talk about it.