What the Average Home Cost the Year You Graduated vs. Today
The National Association of Realtors reported that existing home sales rose 1.5% in September on a monthly basis, while the median home price increased 1.3% to $417,500. It was noted that this was the highest housing price on record for any September.
The housing inventory rose to 1.60 million units, the highest level since the end of 2019. The median time on market was 33 days, higher than the 31 days in August, but first-time buyers made up 31% of sales.
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With this context in mind, MoneyLion decided to review housing prices over the years to see how much they’ve changed and what drove them up.
Average Housing Prices Over The Decades
GOBankingRates shared the average housing price from 2000 to 2024. The following is the average house price from 2005 onward, with the prices listed in the dollars of the year in which they were sold.
2005: $297,000
2006: $305,900
2007: $313,600
2008: $292,600
2009: $270,900
2010: $272,900
2011: $267,900
2012: $292,200
2013: $324,500
2014: $347,700
2015: $352,700
2016: $360,900
2017: $384,900
2018: $385,000
2019: $383,900
2020: $391,900
2021: $464,200
2022: $540,000
2023: $513,800
2024: $512,200
According to Statista, the average sales price for a new home in 2025 was $522,800. Based on the newest Census data, the median sales price of homes was $393,700 as of September. Zillow currently lists the average house price at $366,157.
Since the year isn’t over yet, it’s difficult to provide an accurate assessment of the average price. However, it’s worth looking into the factors that have led to housing prices increasing over the years.
Why Did Housing Prices Explode Before and After The 2007 Recession?
These are the main reasons why housing prices exploded before and after the 2007 recession.
An Unsustainable Bubble Artificially Elevated Prices Before 2007
“Between 2000 and 2007, the housing market experienced an unprecedented and unsustainable bubble in housing prices that ultimately collapsed when homeowners were unable to pay their mortgages (i.e., they defaulted),” said Tim Gaasch, a real estate expert at Clever Offers.
With so many buyers continually entering the market, the space became competitive, driving prices to unrealistic levels.
Unqualified Buyers Bought Homes To Increase Demand
Home prices shot up in the 2000s because of loose credit standards that allowed unqualified buyers to enter the market. Elie Rieder, a real estate expert and CEO of Castle Lanterra, elaborated, "Prior to the 2007-2008 financial crisis, unqualified borrowers were getting enormous leverage (meaning they were borrowing a very high percentage of a property's purchase price).”
This means that people who shouldn’t have been homeowners were given the keys to properties that they couldn’t afford to maintain, disrupting the entire market. With an excess of unqualified buyers, housing prices rose leading up to 2007, but eager investors also engaged in irresponsible, undisciplined investing because financing was so readily available.
Rieder shared that people weren't necessarily concerned about what they were paying because so little of the money was coming out of their own pockets. These investors were overpaying and not being responsible in their underwriting due to the ease of financing.
Interest Rates Dropped
It’s difficult to write about housing prices without discussing the impact of interest rates on affordability and demand.
Rieder emphasized that when the market collapsed during the recession, interest rates were lowered dramatically. The lower rates allowed investors and buyers to pay higher prices while still achieving returns they wanted. The combination of cheaper financing and limited new supply increased competition for available properties. When demand exceeds supply, prices will go up.
Construction Lagged After 2007
The experts noted that housing prices eventually recovered after the 2007 recession because mortgage rates remained low, new construction slowed and demand gradually increased over the next decade or so. When housing demand eventually recovered, very little new inventory entered the market.
The pandemic would eventually accelerate price growth due to lower interest rates, Americans working from home and a limited inventory. Gaasch pointed out that the decade-long lack of new construction and the limited number of existing homes for sale have mainly contributed to today’s sustained increase in house prices.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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