Many young adults grew up hearing stories about their parents buying their first home when they were in their twenties.
But for many millennials these days, it feels like a fantasy.
Young adults, many of whom are burdened by financial hardship, are now living with their parents at a higher rate than people their age 50 years ago. The proportion of young adults who live in a parent’s home has more than doubled between 1971 and 2021, from 8% to 17%, according to a recent report by Pew Research.
Young adults face rising student debt and housing costs, in addition to inflation that has reached disconcerting levels over the past year. Consumer prices jumped 9.1% a year in June, the highest rate in 40 years, although there are signs that inflation is slowing. Among them, prices were stable in July on a monthly basis.
To make matters worse, US wages have stagnated since the 1970s, worker productivity growth three times more than the salary. The economy of the 1970s also experienced a period of high inflation, with prices up more than 12% in 1974partly because of the Arab oil embargo.
In response, many young adults returned to their parents to save money. To put today’s economic challenges into perspective, we’ve looked at the current cost of big ticket items in excess of 1972. All amounts have been converted to 2022 dollars.
Almost half of the tenants believe they will never be able to own a home, largely because of the inability to pay a down payment, according to a 2021 Lending Tree survey.
The median price of a house in the second quarter of 1972 was only $26,800, according to the US Census Bureau, amounting to approximately $189,500 in current dollars. Since then, house prices have soared 132%.
That’s just the national median. In some parts of the country, the selling prices are even higher. The median selling price of a home in the Los Angeles metro area was $918,600 in June, while San Jose’s was $1.46 million. Seattle’s selling price was around $726,600, according to data from Zillow.
There aren’t enough homes on the market to keep up with demand, with new home construction falling to record lows. David Dworkin, president and CEO of the National Housing Conference, told Marketplace that since the start of the pandemic, there has been a sharp decline in the construction of new homes priced below $300,000. $.
When housing becomes too expensive, people rent for longer periods of time, driving up rent for everyone, said Diane Yentel, president and CEO of the National Low Income Housing Coalition. The average monthly rent reached over $2,000 in June, according to Redfin.
1971-72: $10,000 for a four-year public college
$20,700 for a four-year private nonprofit college
2021-22: $24,600 for a four-year public college
$56,100 for a four-year private non-profit college
According College Board data. Rising costs have burdened millions with student debt they struggle to repay after graduating from college, forcing many to postpone or give up hopes of buying a home or starting a family.
In addition to rising costs, graduates face accrued interest on their loans. Student loan payments and interest have been postponed due to the pandemic, but these obligations are expected to resume at the end of this month.
In total, American borrowers have accumulated a colossal amount $1.75 trillion in student debt.
A recent Gallup poll found that rising health care costs led about 40% of Americans to skip treatments, cut household living expenses, or borrow money.
According to the Kaiser Family Foundation, people paid an average of more than $129 for out-of-pocket health care expenses in 1972. That is, equivalent to $915 today.
In 2020, the latest year for which data is available, people paid $400 more in out-of-pocket payments, for a total of $1,350 (after adjusting to 2022 dollars).
Out-of-pocket spending has been a smaller share of the country’s total healthcare spending since the 1970s, according to KFF. This is because insurance programs cover more costs, explained Cynthia Cox, vice president of KFF. For instance, Medicare did not cover outpatient prescription drugs until 2006.
On a per capita basis, however, out-of-pocket spending has increased.
“It reflects the fact that health care prices and health care costs are growing faster than the rest of the economy,” Cox said.
New vehicle prices have increased over the past decades and more during the pandemic, thanks in large part to supply chain issues that have left manufacturers with a shortage of microchips. The average posted price of a new car in July was nearly $48,200, according to Kelley Blue Book.
But the average price of a new car in 1972 amounted to $3,690, according to the National Automobile Dealers Association, that amounts to about $26,100 in current dollars. Since then, the price has increased by around 85%.
We also looked at the prices of some popular vehicles still in production, like the Toyota Corolla and the Chevy Suburban.
The manufacturer’s suggested retail price of a two-door Corolla sedan was over $2,100 in 1972, the equivalent of over $14,900 today. The Corolla L Sedan, the base model in the lineup, has a current starting MSRP of over $20,400 – about $5,500 more than it cost at the time.
And in 1972, a custom luxury C20 Chevy Suburban cost nearly $3,770, or more than $26,600 in today’s dollars. A two-wheel-drive, four-door LS, the base model of the Suburban, now costs nearly $56,500. That’s more than double the 1972 price.
There are, of course, significant differences between today’s cars and those made in the early 1970s, which make comparisons imperfect and help explain today’s higher prices. Automakers must now include airbags in vehicles. They also offer consumers more sophisticated features and capabilities, such as audio touchscreens and rear view cameras.
1972: $1,170 for a three-night/four-day stay at Disney World for two adults and two children
2022: $2,670 for the same
Leisure activities are also more expensive. Historians say vacations in the early to mid-20th century were more affordable and sometimes even subsidized by an employer or union, as Marketplace reported in 2016.
Now vacations are getting out of reach for middle-class Americans.
The cost for two adults and two children of a three-night stay at Disney World, plus four-day admission, is more than double what it was in 1972.
A notebook of seven journeys – which included general admission and access to seven rides – costs $4.95 per day for adults and children $3.95, according to The Miami Herald at the time. Disney World hotels averaged $32 a night, bringing the total cost to $167.20, or about $1,170 adjusted for inflation.
Today, a standard four-day theme park ticket with no extras, plus a three-night stay at Disney’s All-Star Music Resort, one of the cheapest packages available, costs around $2,670.
At Disneyland, on the other side of the country, a “Big 11 ticket book– which included general admission and access to 11 rides – costs $5.35 for adults and $4.30 for children in 1972. A family of four spending a day at the park would spend $19.30 for admission, or about $135 adjusted for inflation. These days, it would cost that family more than four times that amount, or about $582.
Unsurprisingly, the fee structure for each park and the parks themselves have changed since then. These days, a general admission ticket doesn’t limit your number of rides, and both parks have undergone upgrades and added attractions.
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