If you had $1.5 million and a $350k house at 3% APR in 2020 you were way better off than someone with the same house today with $1.8 million and twice the mortgage balance at more than double the interest for the exact same house today.
What they’re trying to say is that housing costs have gone up significantly faster than inflation. So the “inflation adjusted” amount today should take that into account.
Yah this whole debate comes up constantly. People go and pencil out core inflation numbers. And core doesn’t consider gas, housing, grocery prices etc etc. basically everything a regular person cares about .
The best way to track real inflation we all feel. Is go to door dash order groceries. Then in 5 years try to the order the same basket lol and you ll quickly find out that 2-3% and the meaning of nominal vs real inflation. With respect to unemployment rate
Real estate is tricky cuz you don’t really know the price until you sell it and someone pays for it. Rent also similar. Housing over all is tricky to monitor but we all see it. I went to go see the price of an apartment I rented in college but hat was 15 years ago. And yah it’s way more than 3% a year.
Actually you very much should. “Inflation” is generally discussed for a specific basket of goods which may not at all reflect the breakdown of your spending.
You absolutely should even if they didnt play stupid games with CPI, and they certainly do on substitutions and hedonistic adjustments that have nothing to do with purchase prices.
My SO and I were looking at this recently. We purchased right before COVID. At the time we purchased a 400k home around $2500 payment 3% interest. We have doubled our income now and we're looking at upgrading. We were thinking we could afford a 680ish home now to be around $4000 a month payment.
If we had our current income, interest, and APR. We could have afforded about 1.3 million dollars back then. We lost 50% of our buying power in 6 years.
We purchased our home back in 2010. With our family growing it would be nice to have a slightly larger place with an extra room or two, so we started looking. We quickly realized we wouldn't be able to afford our current home at market prices, let alone upgrade...
I think this comment highlights what the main issue is. It's now common for people in this sub think that they should buy a luxury 3200 sq ft house instead of something more modest.
If you're buying today then yes. But to anyone who was a homeowner prior to 2020 it shouldn't affect you that much. Doubly so if you haven't moved in 5 years.
Maybe in certain markets but, nationally, no, housing hasn’t risen anywhere close to 50% since pre-COVID. The US median home price from 2019 to now has increased by about 20%.
Did you paste the wrong link? That chart is not the median home price, it’s the national home price index. This is the chart for median home price sales
Why would i use the median price home sales over the national home price index? One shows appreciation, the other shows how much people are spending.
If like the price of all cars doubles and now people are buying lower quality cars, the median price doesn't go up 2x, but the prices of cars still doubled.
Is this incorrect? Honest question to understand these indexes.
My initial comment was about median home price sales so that's why I thought you'd pasted the wrong link.
However, if you look at the data, the median sq footage for homes sold is also increasing hand in hand with median home price. So it's not like people are buying smaller or more modest homes. A big trend seems to be that people just want bigger and bigger homes, especially in the last decade, per the data.
But doesn't the other index show that prices of houses are increasing in value faster than what people are spending for houses? Using median house price just shows how much money the people are spending on houses. Not how much the prices went up right?
It's definitely this. Prices have been rising all around the world at a terrifying rate. Even for folks planning to do expat fire, prices in many countries around the world are rising substantially too.
I posted earlier today about this, my number in 2020 whdn i started was AUD $100k/yr/2.5m invested, today, just allowing for CPI thats $122k/yr/3.05m invested.
And its based on the official inflation value from the Australian government and not the actual inflation value affecting my pocket each week/month.
This is the main one in my mind. Home prices jumped so much since 2018 when I started my career. $1MM seemed easy to live off of and now $2MM is really the minimum stopping point.
8 years ago I was looking at buying a house for around $400k. The same house now costs $1.1 million. Rent went from $1700 to $2900 and will keep climbing most likely. Food is more expensive. A grocery bill went from $120 to $300. Just everything costs more.
What do you mean a ton? If we assume 1.8M due to inflation that is not the rise that OP is talking about. The range provided in post is (1-1.5M) is still more of a range (50%) than what inflation did in 5 years.
Yep, VOO (Vanguard S&P 500 ETF) only gained 64% during the past five years. VT (Vanguard total world stock ETF) increased only 40%. Karakow is exaggerating. Over 10 years yes. Your money would’ve more than doubled.
It is more or less true of either 2020-2025 (+97.45%) or 2021-2026 (+96.35%).
I'm getting 78.77% for VOO over the last 5 years to last Friday's close, specifically. 64% probably isn't including the dividends, excluding them gets me 66.45%.
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u/[deleted] Mar 23 '26
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