In 1980 in the United States – just over 30 years ago – a new home in this country cost an average of $76,000, and the median income was $17,710 per year. Compare that to 2011, when even after the recent recession, the median home price stood at $139,000, and median household income was $50,233 per year according to the US Census Bureau.
Why the vast difference in prices? One word: Inflation. Like aging or weight gain, the effects of inflation are both gradual and profound. Inflation creeps up on us over time, and as we continue our normal spending and consumption habits, the almost imperceptible increase of consumer prices doesn’t seem to make a huge difference in our day to day finances – which means it is all too often vastly underestimated.