Is housing really becoming less affordable?

Is housing in JAMMI less affordable than it used to be?

No-one questions how unaffordable housing has become, and now food prices are skyrocketing. We are told that people are being priced out of Oakland. But is life really less affordable than it was, say, 25 years ago?

The US census tells us that, in 1979, the median income in Oakland for a household was $13,780. The City’s official median income in 2006, for a family of four, was $82,200. If we trust these figures, incomes are now six times what they were 27 years ago.

To see if prices have really outpaced incomes, I checked locally advertised food prices, rental listings, and property sales in Oakland in May of 2008 compared to 1983. To get the 1983 figures, I reviewed microfilm of the Oakland Tribune for various weeks in 1983. For the 2008 prices, I scoured the Oakland Tribune as well as online sources. Here’s what I found:

For-sale property: prices of residential property, prices have risen 5 to 6 times in 25 years.

Rental property: rents are three times what they were 25 years ago.

Food: Groceries are about double what they were back then.

The obvious conclusion is that we are living better and more cheaply now than we did in 1983. Prices in all categories have risen less than incomes!

Don’t believe me? I could hardly believe it myself. No wonder, the media and politicians have been beating the drum of affordable housing for so long, we forget to say “show me.” Well, here are the details from my own little study.

For housing, I concentrated on North Oakland and West Oakland, to the extent possible. Back in 1983, the Tribune was the place to look for previously occupied houses for sale, and North and West Oakland were lumped into the category “west of Broadway.”

For Sale................. 1983........... 2008...... Increase
2 bdrm (avg of 5) $82,100... $416,970...... 508%
Duplex (avg of 4) $96,875... $560,000...... 578%

For rental units, a good current source is the OHA website listings for Section 8, where “market rate” rents are shown. I was able to easily identify properties in our neighborhood. The source for 1983 rents, again, was the Tribune.

Rental Units..................... 1983.......... 2008....... Increase
studio rental (avg of 5) $268.00..... $701.00....... 262%
1 bdrm rental (avg of 7) $302.86.... $812.00....... 268%
2 bdrm rental (avg of 5) $433.00. $1,234.50 .......285%

Groceries were fun because I compared the advertised sale prices in newspaper inserts from 1983 and 2008. In many cases, the identical item was shown. One glaring example: Safeway recently had Yoplait yoghurt on sale for 50 cents each. In 1983, a sale advertised the same product for 49 cents each. Yoghurt lovers are doing well these days.

Item ..................................................1983.......... 2008...... Increase
Tomatoes, 1 lb............................ $0.59........... $0.77...... 131%
Navel oranges, 1 lb..................... $0.40........... $0.69..... 173%
Crest toothpaste, per ounce...... $0.18............ $0.71...... 393%
AA Energizer batteries, 4 pack.. $2.19.... ....$2.90..... 132%
Kingsford charcoal, per pound. $0.28.......... $0.59...... 212%
Bacon (1 lb)................................ $1.59........... $3.00 ......189%
Yoplait yoghurt (6 oz).............. $0.49........... $0.50 .......102%
Pineapple................................. $1.69 .............$2.99 .......177%
Doritos Tortilla chips (per oz). $0.12 ...........$0.24...... 194%
Ground chuck (per pound)...... $1.89........... $1.60 ........85% (a decrease!)
Welch's grape juice (64 oz)...... $2.38........... $3.00..... 126%
MJB coffee (1 lb)....................... $1.99........... $5.99..... 301%
Post cereal ....................................$1.57........... $4.99 ........318%

Yes, my survey was unscientific and the housing samples were small. But I made no attempt to skew the numbers. I was as surprised as you are!

So, the next time someone tells you how unaffordable anything is these days, ask for corroboration. Yes, prices have shot up in recent years. But maybe that is just a correction because we had it so good in the Clinton era.