As we near the end of the decade, it’s interesting to look back and see what things looked like at the start of the decade. Here’s a comparison of 2010 versus how things look now as we head into the latter half of 2019.
Real estate markets change over time, but the changes can be pretty slow. For every hot market like we saw back in early 2017, there are a number of months where there are just incremental changes from the previous months.
Over time, those changes translate into a very different feeling real estate market than we operated in years ago. Through the miracle of statistics, we can do a handy-dandy comparison and come up with an answer to the question of how does buying and selling real estate feel now compared to back at the start of the decade. Good news, it’s a lot more specific than just saying that while housing may look pretty similar, it’s actually quite different buying and selling real estate these days.
Let’s look at a side by side comparison. Fields in green indicate which year the aspect in question was better, and red means it was worse in that year.
As you can see, on all but the average sale price of real estate, 2019 looks better. That’s somewhat subjective still, as if you bought your home in 2010, you’re probably pretty happy to see the average sale price has gone up to where it is now.
Despite some subjectivity, it’s really interesting to see the changes in these aspects compared side to side. Here’s the key things to remember for your next cocktail party when the talk turns to real estate.
- Back in 2010, the average price was about 10x the average income. Now, it’s closer to 15x.
- In the last 9 years, the average price has almost doubled, up over 90%. Income has only gone up by about 30%. So, the cost of real estate has gone up 3x more than the income of the people who buy it.
- If you’re wondering how people can afford these high prices when they’re not making much more, it’s because of interest rates being so low these days.
- Back in 2010, each $100K of mortgage cost around $540 per month. More importantly, only about 38% of that was principal with the remaining 62% being interest.
- In 2019, each $100K of mortgage costs about $460 per month. That’s $80 less per month for the same money! Even better, 53% of that monthly payment is towards principal, with only 47% being interest. Much better than 9 years ago.
- In 2010, it took more than a week longer to sell a home. It used to almost take a month to sell, but now it takes only a bit more than half a month.
- While Realtors may talk about how things are slower now, with fewer deals than a couple of years ago, we’re actually doing pretty well and are a bit busier than back in 2010.
If you go for a drive, the housing stock looks pretty similar to how it did back in 2010, but make no mistake it was a very different environment to buy or sell real estate. It’s now a much bigger commitment due to the prices being paid and how much people make as a percentage of the purchase price.
On the flip side, it makes better economic sense now to borrow, as it’s cheaper and that has a big impact on how much principal repayment is happening on the ever increasing purchase price. Despite the high prices, we’ve seen a small increase in the number of deals being done, so the appeal of low mortgage rates is definitely helping keep the party going.