Source: Redfin —
For the first time since the 1980s, Americans are dealing with 8%+ inflation in consumer prices. American homebuyers, however, have been dealing with inflation since 2012. The typical home costs double what it did in 2012, but the typical worker is only earning 35% more. There are many lessons to be learned from a decade of home-price inflation as we attempt to solve today’s widespread consumer-price inflation. Like everything in economics, it comes down to supply and demand.
Home-price inflation is largely due to constrained supply. According to Freddie Mac, the United States is short approximately 4 million homes. We built fewer homes in the 2010s than any other decade going back to the 1960s. And we aren’t making the best use of the land in some of the most desirable places to live due to restrictive zoning laws.
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