Average Home Prices and the Forces That Form Them

Many of us saw housing headlines that pointed out dramatic price increases in the last few years. Ever since the COVID-19 pandemic, housing prices have skyrocketed. Homes sell for far over the asking price due to high demand. Flippers are buying up housing stock to make their fortune. Factors like inflation and migration out of cities have put a massive strain on the market. The data displayed by Madison Trust Company shows us context for changes in housing prices by displaying the average price every year since 1963. We even get to see this price adjusted for inflation.

The graphic shows us that the most expensive time to buy a home was in 2022 when the average price was $552,600 when everyone was relocating during the pandemic. This is a huge contrast to the very beginning of our data, which started in 1963 when the average price was $19,600 (or $195,791 in today’s dollar value).

We see a lot of changes in the big picture changes over the decades. Many large-scale events can affect the average home price. Beyond the many changes COVID-19 brought about, we also see the effects of the 2007-2008 mortgage crisis. Prices dropped when a previous housing bubble burst, sinking the country into an economic crisis and drastically lowering home prices. The collapse of the market resulted in a 14% drop in prices in 2009.

Buying a home in the current climate can be daunting, but never give up. You can consider where you’ll buy a home, which will dramatically affect the price, grants for first-time buyers, and other loan offers from local banks. If you have the skills to work on a fixer-upper, this can help you save money too. As you can see in the data on the graphic, there’s hope that average prices will drop again in the coming years, though inflation has caused prices to rise steadily over the decades.

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