This week I was in Chicago. It had been 24 years since the last time I visited the city in 1994. How time passed by! While the city may have gone through some changes, what drew my attention was the gas price.
The current gas price in Chicago was $3.37 per gallon. If compared to Hong Kong, it was not that bad. However when compared to my last visit here in 1994, it was high. In 1994, the gas price was about $1.11 per gallon. So it was like a 3 times increase! And I talked to a driver of Lyft, who was an immigrant from Brazil. She said the current minimum wage in Chicago was $12 per hour. And the minimum wage in 1994 was $4.25. So it was almost a 3 times increase as well. Talk about inflation!
And I started thinking whether investing in real estate was a good hedge against inflation. According to the United States Census Bureau, the median and average sales prices of new homes sold in the United States in July this year are $328,700 and $394,300 respectively. During the same period in 1994, the median and average sales prices were $124,400 and $144,400. The increases are 2.64 times for the median sales price and 2.73 times for the average one. It seems like the housing has been catching up with inflation. Maybe investing in real estate is a safe choice to safeguard one against inflation.
- Chicago gas price 1994:
- Chicago minimum wage: 1994 and 2018
- Median and Average Sales Prices of New Homes Sold in United States (historical data)