The Median House Prices in the United States from 1963 to 2004 is listed in the following table. You can also find the year over year grwoth in the house prices in the third column of the table. There were only two instances in the last 4+ decades when the year over year growth in the median prices of the home was negative. After one such instance, from 1969 to 1970, the median house prices rose sharply in the 70s; and before another small decline in 1990 the prices rose in the mid 80s. The average growth rate for the median house prices for the last 41 years is 6.26%.

Note: To see the latest median and average house price go to my latest post "Median and Average House Prices in USA Since 2000"

Year	Median House Price	Percent Gain
1963	$18,000.00	5.00%
1964	$18,900.00	5.82%
1965	$20,000.00	7.00%
1966	$21,400.00	6.07%
1967	$22,700.00	8.81%
1968	$24,700.00	3.64%
1969	$25,600.00	-8.59%
1970	$23,400.00	7.69%
1971	$25,200.00	9.52%
1972	$27,600.00	17.75%
1973	$32,500.00	10.46%
1974	$35,900.00	9.47%
1975	$39,300.00	12.46%
1976	$44,200.00	10.40%
1977	$48,800.00	14.13%
1978	$55,700.00	12.92%
1979	$62,900.00	2.70%
1980	$64,600.00	6.65%
1981	$68,900.00	0.58%
1982	$69,300.00	8.65%
1983	$75,300.00	6.10%
1984	$79,900.00	5.50%
1985	$84,300.00	9.13%
1986	$92,000.00	13.50%
1987	$104,500.00	7.65%
1988	$112,500.00	6.66%
1989	$120,000.00	2.41%
1990	$122,900.00	-2.35%
1991	$120,000.00	1.25%
1992	$121,500.00	4.11%
1993	$126,500.00	2.76%
1994	$130,000.00	3.00%
1995	$133,900.00	4.55%
1996	$140,000.00	4.28%
1997	$146,000.00	4.45%
1998	$152,500.00	5.57%
1999	$161,000.00	4.96%
2000	$169,000.00	3.66%
2001	$175,200.00	7.07%
2002	$187,600.00	3.94%
2003	$195,000.00	13.33%
2004	$221,000.00	N/A
Average Median House Price Growth		6.26%

The following chart depicts the data above. The last data point of 2004 looks out of sync. We may see some mean reversion in the following year. I hope this chart provides a clear picture to you about the US housing market.

One important thing to think about from this post. The median house prices rose on average 6.26% each year for last 40+ years, and today's mortgage rates are below 6%.

All disclaimers apply.

Data Source: http://www.census.gov/const/uspriceann.pdf

posted by Moneywise, on Sunday, August 28, 2005 at 11:12 PM

6 Comments:

The comment about the ratio of the house price rate to the interest rate is interesting. However, if these are the median sales price data, then since houses have been getting bigger over the years, the figures don't represent the change in value of a fixed set of houses (e.g., the one I own).

I believe there is data that follows a fixed set of houses, which would be more interesting. Also, displaying in constant-value dollars (i.e., allowing for inflation) would be more of a "real return" kind of thing.

By Robert the Red, at 3:06 PM
This data/chart is meaningless if inflation is not taken into account. The reason house prices have gone up is because money has devalued. In real – inflation adjusted – terms, that house worth $18,000 in 1963 is only worth $35,600 in 2004. That’s a real rise of 1.6% per year, which I’ll wager is mostly explained by wage growth.

Real estate has no magical properties as an asset class, despite people believing it does from time to time. When they do, a bubble is formed which subsequently pops and everyone gets hurt. Looking at price data in the last 50 years tells us nothing – better to look at Florida in the 1920’s, Japan in the last 15 years or Hong Kong 1997-2002.

Having said this, the bubble is likely to continue for some time before it bursts.

By Extradry Martini, at 9:58 AM
Comparing the home value with inflation adjusted dollars neglects one other very critical factor.

The home provides shelter in lieu of rental housing.

If you add back to the value of the home the cost of rental housing and perhaps deduct some of the costs of ownership you get a better measure.

By Steve, at 7:56 PM
True, inflation needs to be factored in, but what is more important is that owning a home provides the opportunity for appreciation as a secondary benefit to its value in providing shelter.

If you want to do a true comparision you need to do an analysis which adds the savings in rent and deducts the operating costs which would be paid by the apartment landlord.

In addition to these strictly economic issues home ownership often provides a host of additional benefits.

By Steve, at 8:01 PM
If you look at Robert Shiller chart of housing price over 116 years the National median house price should be around $100,000. The jump in the past 7 years is abnormal.

http://housingpanic.blogspot.com/

http://photos1.blogger.com/blogger/
6089/1833/1600/shiller.gif

By Anonymous, at 9:02 PM
If housing has grown 6% on average over 40 years, and if you can lock your mortgage rates in now below 6%, then who cares about inflation?

I'm not sure of rental yields in the US, but in Australia they're typically 5%, operating costs in the long term might run at 2.5%, so that's another 2.5% of creme on top.

If you live in it and can claim a tax deduction on the interest, with a marginal tax rate around 40%, then a 4% interest rate drops to 2.4%. Add in depreciation of the building at 2.5% p.a. (I assume you also have this in the US?), and the fact that you can gear it at 95% LVR, or even higher, with no margin calls, and it starts to look pretty attractive.

Long term returns on the stock market, if you take the depression into account are roughly 7%. All in all housing ain't that bad an investment, even if the tenants are a pain :)

By Raphael, at 1:12 PM

The Real Returns

US Median House Price

6 Comments: