SKYROCKETING INFLATION, RENTS, AND HOME PRICES RICK TOBIN
The financial chart above from the St. Louis Fed’s Federal Reserve Economic Data team helps to simplify how
California home prices widely fluctuated from positive to negative during corresponding national and global
“boom and bust cycles” such as Black Monday (October 19, 1987) when the Dow Jones lost over 22% of its
overall market value in just one day, the Savings and Loan Crisis (1980s to mid1990s), the
Telecommunications and DotCom Busts (near 2000), The Credit Crisis (August 2007 onward), and the Federal
Reserve’s almost eight plus years of pushing bailout programs like Quantitative Easing (or “create money out of
thin air to buy up stocks, bonds, and mortgages so that asset prices increase and interest rates decline to
record low levels”). Amazingly, incomes in California and the U.S. have been relatively flat over the past few
decades.
The housing market effectively last peaked at a market high in 2006 in many parts of the U.S. While there are
some regions of the U.S. today with even higher peak median home prices such as in prime coastal or
metropolitan regions, the vast majority of home prices are either right near or still below their last market price
peak a full decade ago in 2006.
Dating back to the official start of “The Credit Crisis” in August 2007, anywhere between an estimated seven to
10 million American families lost their homes due to foreclosure, per various wide ranging housing reports.
Upwards of one million California households alone reportedly lost their homes over the past decade to
foreclosure. Between 2005 and 2016, the number of new renter households increased by over nine
million; this increased demand for rental units also pushed rental prices upward dramatically during the
past decade.
The Cost of Living 20 Years Ago in 1996
20 years ago, the numbers were significantly more reasonable than today and a decade ago (2006):
* Annual Inflation Rate: 2.93%
* The Year End Close for the Dow Jones: 6,448
* Average New Home Price: $118,200
* Average Monthly Rent Nationwide: $554
* A Gallon of Gas: $1.22
* U.S. Postage Stamp: 32 cents
* Average Car Price: $16,300
* Minimum Wage: $5.15
2006
(*Source above: www.thepeoplehistory.com/1996.html )