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A comment on Millennials Are Poorer Than Their Parents, Investigation Finds. Parent comment

Re:Millennials Are Poorer Than Their Parents, Investigation ... by jackcosgrove on Tuesday March 08, 2016 @01:10PM (#11247155)
In December 1975 the Case-Shiller US National Home Price Index was at 26.45. In December 2015 it was at 175.65. Case-Shiller prices are nominal. So nominally, home prices have risen 564% in 40 years. (http://us.spindices.com/indices/real-estate/sp-case-shiller-...)

In 1974, median real household income for those aged 25-34 was about $54,000 per year. In 2014, it was roughly the same. (http://www.advisorperspectives.com/dshort/updates/Household-...)

Using a BLS inflation calculator, we can calculate the 1974 nominal median income for those aged 25-34 as $11,245. (http://www.bls.gov/data/inflation_calculator.htm)

As a sanity check, I checked the Census for the median household income in 1974 and it was $12,840, which makes sense. (http://www2.census.gov/prod2/popscan/p60-101.pdf)

So in 1975, the Case-Shiller index to young household median nominal income ratio was 0.00235. In 2015, it was 0.00325. This means that in 40 years, the amount of money young households must pay for buying a house has risen by 38%.

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Re:Millennials Are Poorer Than Their Parents, Investigation ... by LaMarseillaise on Tuesday March 08, 2016 @01:59PM (#11247581)
Does this index account for the increase in home size since 1975? Homes are nearly twice as large now.
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Re:Millennials Are Poorer Than Their Parents, Investigation ... by jackcosgrove on Tuesday March 08, 2016 @02:16PM (#11247724)
It does not adjust for square footage, so yes that's a good point.
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Re:Millennials Are Poorer Than Their Parents, Investigation ... by ianferrel on Tuesday March 08, 2016 @02:21PM (#11247753)
The 30-year mortgage interest rate in 1975 was 8+%. These days it's less than 4%.

The value of the house has increased significantly, but has the value of the monthly payment?

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Re:Millennials Are Poorer Than Their Parents, Investigation ... by jackcosgrove on Tuesday March 08, 2016 @02:26PM (#11247794)
For first time buyers the down payment is a bigger hurdle than the monthly payment. Higher purchase prices make this hurdle even higher, even if monthly payments as a proportion of income are the same, as I suspect they are.
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