Income Inequality vs. Home Price Inequality
Post #1320
One way to determine inequality is to compare a median value — the middle value in an ordered set of values — to the mean value, or the arithmetic average. While symmetric datasets have the same mean and median value, when there are a few really high values in a dataset (positive skew), then the mean is “pulled up above” the median.
In the 1960s and 1970s, the income inequality — as measured by the ratio of mean/median — matched the home price inequality, as the richer persons were buying bigger and higher priced homes, while the middle-class was buying modest homes at modest prices. But recently, those modest-priced homes have been disappearing:
The dotted line estimates the income inequality, and it has been going up ever since LBJ instituted his Great Society domestic programs (circa 1965) which had the effect of growing the federal government and of getting several new federal offices into each of the 50 States of the Union. Earlier, home price inequality tracked income inequality.
But then income inequality grew faster than home price inequality. It’s not because the price of homes wasn’t going up, the price of homes has had historic long-run inflation. Instead, it is because the price of the “middle home” has gone up in relation to the price of the mansions owned by the rich.
This means that, while median income has stagnated, the median-priced home has steadily inflated — having the effect of pricing the middle-class out of a home. The median earner can no longer afford the median home. In fact, the median price of a home is now over $400,000:
A key player in this debacle is BlackRock, which has been found outbidding single-family home buyers and paying in cash at 10% over asking price to snatch up the homes. It is as if a group of people have “different plans” for America and are leveraging themselves in order to push-out upstart American families for God-knows-what:
A plan for a “Renter’s Society” — where you will own no home, and be happy — could be in the works. That kind of thing would perfectly explain the behavior of BlackRock. It sounds like the planned demise of America-as-we-know-it, a sinister ploy anchored to some sort of a Great Reset regarding world rule. Hopefully, Trump can reverse this.
Approximating the 2021 income inequality
Here is a distribution of values which has a ratio of mean/median very close to that found from income inequality of 2021 in the top chart:
[click to enlarge]
This distribution has extreme positive skew — like income does. The median is inside of the yellow bar just below 1.0 and the mean is inside of the 2nd green bar (two bars above the median). The mean/median ratio is given at very bottom left (~1.39).
Reference
U.S. Census Bureau, Median Family Income in the United States [MEFAINUSA646N], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MEFAINUSA646N
U.S. Census Bureau, Mean Family Income in the United States [MAFAINUSA646N], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MAFAINUSA646N
U.S. Census Bureau and U.S. Department of Housing and Urban Development, Median Sales Price of Houses Sold for the United States [MSPUS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MSPUS
U.S. Census Bureau and U.S. Department of Housing and Urban Development, Average Sales Price of Houses Sold for the United States [ASPUS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/ASPUS
Business Insider. https://www.businessinsider.com/blackrock-wall-street-investors-buy-homes-neighborhoods-single-family-rental-2021-6