The widening gap between median income and median house prices over the past 40 years

The median sales price of houses in the US reached a peak of $479,500 in Q4 2022 before the economy crashed. 📉

And it’s directly related to entrepreneurship, B2B, and fuzz markets like crypto or gambling. How?

The current median price is down $60,000 a year later—a clear indication of another bubble, not so different from the 2008 Great Recession. 🫧

Home ownership is a controversial topic in itself. I personally advocate for renting and I resisted a buy forever – but two kids and two dogs makes it harder to move around and not every unit is dog-friendly.

🧑‍🏫 But the combination of:

– Several housing bubbles
– Seeing real estate as a viable investing mechanism
– Expensive rent (justifying paying back mortgages through rental)
– Niche segments exploding in net worth (Nasdaq companies)

have led to a frightening gap between the median income and median house prices.

➡️ 40 years ago, a median house sold for $78.2K with median household income of $22.4K.

➡️ In 2022, it’s $433.1K to $74.6K.

Interest rates have been fluctuating over time so mortgages aren’t equally comparable, but it’s still a 3.5X multiple going as high as 5.8X and now around 6X in recent times.

How does that affect B2B and appetite for startups again?

👨‍🏭 The working class is having a harder time working hard enough to get the same standard of living compared to 20, 30, 40 years ago.

Excessive hiring in the past years hasn’t contributed a ton here. Why?

1. Hiring more people for the same job does not provide consistent and sustainable opportunities for salary raises.

2. Business efficiency is going down, producing lower quality/amount of a product/service compared to a lean, effective team.

3. Business principles of meetings, long commuting, back and forth, combined with slow and tedious processes, have organically contributed to that low productivity curve.

4. Bloated headcount with low productivity causes layoffs – what we’re seeing in the past 18 months, affecting job safety and increased risks of taking mortgages.

💣 Employee motivation at the workplace is at its lowest – it won’t get any better with social media blasting success stories or advertorial HR videos of the Googleplexes or Mashable announcing other Series B, C, D rounds. These have been awkwardly quiet lately with the VC funds down and recurring layoffs.

Entrepreneurship has its place on earth, but it shouldn’t be the norm to be able to secure retirement.

📈 Companies globally should optimize for efficiency to maintain salary bumps even for smaller teams to justify “working for the man” as a lasting model.

Are we entering this stage in 2024?

(Props to Visual Capitalist for another great chart that sums the gap.)