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The Real Estate Market: Then and Now

Road signs facing different directions one says past and the other says future to illustrate the real estate market yesterday and today

Comparing the real estate market in 1988 to now is more than just a nostalgia trip

I just read an article in curbed.com about the annual State of the Nation’s Housing report from The Harvard Joint Center for Housing Studies and found the intel on the real estate market interesting. This report, which is in its 30th year, offers a view of the changes in the U.S. home and rental market. It tracks everything from the vibrancy of the housing market to prices: measuring the statistics against former years.

Idealism vs. Reality

It’s easy to wistfully imagine the housing market in 1988 and want to jump on your own DeLorean Time Machine. For many homebuyers, the idea of going back in time is alluring. That’s when it seemed easier to buy a home due to fewer government policies.

Here are some of the report’s findings:

Measurement
1988
2017
Difference
%
Median new home sale price (*)
$233,184
$323,100
$89,916
39%
Median new home size
1,810
2422
612
34%
Median existing home sale price
$187,053
$247,200
$60,147
32
Median price-to-income ratio
3.2
4.2
1
31%
New units completed
1,530
1,153
-377
-25%
New single-family homes completed
1,085
795
-289
-27%
Inventory of existing single-family homes for sale
2,160
1,290
-870
-40%
Months’ supply of existing single-family homes for sale
8.6
3.9
-4.7
-55%
Millions of rental households (*)
32.8
43.8
11
33%
Share of households aged 20-39 w/student loan debt (#)
24.30%
43.50%
19.2 ppts
79%
Share of debtors w/$50,000 or more student debt (#)
3.60%
21.20%
17.6 ppts
489%
Median student loan debt balance (#)
$5,600
$19,000
$13,400
239%
Millions of households with cost burdens (*)
24.3
38.1
13.7
56%
Millions of renter households with severe cost burdens (*)
6.3
11
4.7
75%
Percent of households with severe cost burdens (*)
11.50%
15.60%
4.1 ppts
36%
Homeownership rate for 25–34 year old’s
45.20%
39.20%
6.0 ppts
-13%%

Categories marked with an (#) use 1989 data, and those with a (*) use 1990 data from Harvard Joint Center for Housing Studies

The Good, the Bad, and the Road Ahead

Before you dream of traveling back in time yourself, you need to consider a couple things about the housing market back then. For starters, interest rates hovered around 10.5. Homes were smaller as was the student loan burden. The market wasn’t experiencing the serious supply challenge or the rise in rent for that segment of the population.

You don’t have to go back in time to check out the good news about the real estate market today. In a recent blog, I shared how economists say real estate prices will continue to grow in 2018.

If you’re considering buying or selling in Montecito, Hope Ranch or any of Santa Barbara’s upscale communities, please call at 805.886.9378 or email me at Cristal(at)montecito-estate(dotted)com. I’ll happily add your listing to my portfolio of fine homes in the area and simultaneously find your new dream home for your family.

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