How has the amount Americans spend on housing changed in the last thirty years? As you can see from the graph, the housing market has been consistently volatile since the 1970’s due to seasonal changes and times of economic hardship and recession. There was a huge drop beginning in 2007 and lasting through 2009 from the devastating recession of that time. The housing market has been trending upwards since then, but still is recovering and is at one of the lowest points in history still. This graph takes into account the increasing prices of houses and increasing average income per person over the years. It normalizes the values by dividing the total value of all houses by the nominal GDP.
Just in the last five years, the average square footage of a house has increased by 300 square feet. The size of houses and median price of new houses have both trended upwards over the years, which accounts for the hesitancy of buyers to spend their disposable income on houses. Because of the price increases, it’s harder for young people to enter the housing market and the average age of buyers is increasing as well.
What other factors could affect the dwindling sales of new houses in the market today?