If you want to buy a house this year, you may well be paying around $199,200, the median price for a home in the U.S., according to Zillow.
That number might be lower if you if live somewhere like Ohio or Michigan, but if you happen to reside in a large coastal city such as New York or San Francisco, that number will be a lot higher. In fact, it could cost you well over $1 million to purchase a home.
Houses weren't always this expensive. In 1940, the median home value in the U.S. was just $2,938. In 1980, it was $47,200, and by 2000, it had risen to $119,600. Even adjusted for inflation, the median home price in 1940 would only have been $30,600 in 2000 dollars, according to data from the U.S. Census.
Here's how much the median home value in the U.S. has changed between 1940 and 2000:
Here are those values again, adjusted for 2000 dollars:
It's natural for prices to rise over time. But the issue here is that home values are outpacing inflation, making it nearly impossible for new and young buyers to enter the market.
Dramatically higher prices are partly why the typical homebuyer is now 44, whereas in 1981, the typical homebuyer was 25-34.
In 2016, home prices rose twice as fast as inflation. And in nearly two-thirds of the country, housing price growth exceeded wage growth. While homes in some towns remained affordable, in places like Manhattan and San Francisco buyers would need to fork over between 95 and 120 percent of their average paycheck to afford a mortgage payment.
However, if you can swing it, many experts still agree that buying a house is a good investment. Self-made millionaire David Bach says that not prioritizing homeownership is "the single biggest mistake millennials are making."
In his New York Times bestselling-book "The Automatic Millionaire, " Bach writes, "As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!"
If you're determined to make homeownership a reality for yourself, here are a few tips to get you started:
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