US house prices in 1950 vs. 2024, accounting for inflation

https://brilliantmaps.com/us-houses-prices-1950-2024/

by ivewonyoung • 2 years ago

135 231 2 years ago

Finnucane2• 2 years ago

Now do price-to-income ratio over the same time.

notadoc• 2 years ago

10x-15x+ price to median income is common in many desirable areas. Completely ridiculous, but also what you might expect after a decade+ of QE, asset inflation, and the last four years of core inflation.

ponector• 2 years ago

Still not that bad comparing to other countries, like those in EU.

Finnucane2• 2 years ago

To say nothing (apparently) of decades of allowing the wealthy to absorb most of the created wealth of the last few decades.

ajross4• 2 years ago

That's because "desirable" areas aren't fixed over these timescales. Today's gated suburbs in the Bay Area were literally dust bowl farms in 1950! Like, literally Steinbeck wrote a famous novel about it.

baron816• 2 years ago

Yes, comparing to median household income is the right way to do this. CPI isn’t actually useful in this case.

em500• 2 years ago

The longest history I could find using FRED data is this: https://fred.stlouisfed.org/graph/?g=1BPi3. So median house price to family income rose from 2.9 to 4.3 between 1963 and 2003, based on the series https://fred.stlouisfed.org/series/MEFAINUSA646N and https://fred.stlouisfed.org/series/MSPUS.

Getting long historical series of economic data is often a challenge due to changes in definitions and sampling methodology over time. FRED has a bewildering array of both income and house price series, all with subtly different definitions, most with pretty short histories.

cma• 2 years ago

Should also also adjust for price/sqft and energy efficiency/insulation savings, lack of plumbing in some and ~15% without electricity. And also externalities of 1950s air conditioning designs that would have depleted the ozone by now if we stayed with them, and things like lead paint causing mental development issues.

Median wages are up since significantly since 1950 (most stagnation was after 1970s), and house building is expected to be heavily affected by purchasing power parity, using a heavy portion of local labor.

Occupational deaths in construction went from 8 per thousand workers in 1950 to below 2 per thousand today, but I couldn't find numbers for residential. In the 1950s, if there was as much highschool attendance as today, out of each medium sized highschool you'd expect a higher than 50% chance of one of your peers to eventually die in a construction accident.

inglor_cz• 2 years ago

Given that even in the least attractive locations, home prices have grown around 100 per cent, we can probably chalk those 100 per cent up to general improvements of homes (size, appliances etc.) Neither homes, nor cars, nor planes are the same as they were in 1950.

The rest is the "true" growth.

jonnycomputer2• 2 years ago

I only want to add that in 1950 a significant number of homes still did not have indoor plumbing, and I'd guess that a lot of existing housing stock was small square footage. I don't want to say there wasn't housing inflation, but I do think the the nature of housing stock has changed too.

TuringNYC• 2 years ago

I do think the the nature of housing stock has changed too.

Ultimately it doesnt change the fact of affordability unless one can also find homes w/o indoor plumbing to make up for inflation.

mlyle3• 2 years ago

Hedonic adjustments are important but, as you point out, have issues.

But, affordability isn't represented well by inflation, either. Median family income in 1950 was equivalent to $45k today; the actual number is $100k.

A big part of the issue is that workers stopped benefitting from productivity growth in the mid-1990s. That's what's really made the housing crisis particularly sharp.

ChrisMarshallNY• 2 years ago

In our area, it doesn't matter what shape the house is in. Most of the buyers seem to be corporate buyers, and they often gut and rebuild.

They pay cash, too, which many sellers like.

tdb7893• 2 years ago

In a lot of states there was a more than 3x increase in price which I think is hard to justify as a difference in stock. Median square footage for homes now is only 1835 square feet (https://fred.stlouisfed.org/series/MEDSQUFEEUS). There are also a lot of arguments like how quality has gone up but building technology has vastly improved. Either way that the price increase is mostly a function of housing quality doesn't seem convincing to me (I've seen really garbage houses go for crazy amounts recently).

One example is my grandparents' home was built in the 1930s. It's a small home but in a good location and they said when they were younger it was worth ~200,000$ (I don't know the exact decade they were talking about here but from context it was somewhere in the 50s to 70s). The literal exact same house is now worth around 3,000,000$. The house now needs a lot of work (it actually decreases the value of the land) but the price is still 15x higher.

tpmoney3• 2 years ago

It's a small home but in a good location and they said when they were younger it was worth ~200,000$ (I don't know the exact decade they were talking about here but from context it was somewhere in the 50s to 70s). The literal exact same house is now worth around 3,000,000$. The house now needs a lot of work (it actually decreases the value of the land) but the price is still 15x higher.

If this is true, and using 1960 as our middle of the road, then this isn't exactly "egregious". 200k in 1960 is 2.1M today just accounting for inflation. If we use 1950 it's 2.6M and if we use 1970 it's 1.6M. Now sure the house needs work, but I also. bet the area even if it was "good" when they built it in the 1930's how many more people are living in the same location now all vying for the same plots of land? People often gawk at what their parents or their grand parents paid for their houses, but rarely consider what living there would have been like 30 or 60 years ago. I have some relatives that bought a house outside a developing area about 30 years ago that's probably seen an easy 3-4x increase in value (of which only 2x would be accounted for with inflation. But the difference between then and now is that when they bought that home, it was 1 of 6 on a street in the middle of nowhere, surrounded by fields and undeveloped land. There was a single main road that ran through "town" about 5 minutes away that had 2 gas stations, and 3 fast food stores and a grocery store. For anything else you were driving 20-40 minutes into the nearest city (or around). They commuted every day 45 minutes into the city. Today that same area is bursting with new homes, there's now 2 exits / entrances onto the highway within 10 minutes of their house, the main street is jam packed with businesses and filled with strip malls and shopping centers with multiple grocery stores, and a good chunk of the main "national brands" you might expect (Home Depot, Lowes, Walmart, Gamestop etc). And just about anything they don't have along that main street and it's adjoining centers can be found 15 minutes away in the shopping centers and neighborhoods that sprung up between them and the city. In short, the house they live in today is in the sort of place some folks looking to move into a thriving and growing area would want to move into, and the house they bought 30 years ago was in the sort of backwoods sticks that such people would be avoiding as "too remote".

jonnycomputer2• 2 years ago

I never said that all or even most of the change in price is simply a function of changes in housing stock. I simply stated that changes in housing stock is something you must account for.

Also, your example of your grandparent's home is long tail. Some places have seen skyrocketing prices that have everything to do with the location (and zoning restrictions limiting stock of housing in area). Example would be Santa Monica. Lots of coastal towns in California. But median, not mean. Think about all the one-room shacks that used to exist. You don't see them anymore because ... why would someone keep them around now? The homes that survive are the ones that retained enough value to make it worthwhile to keep up/restore.

Here in southwest Virginia, an empty lot near town might be about $40k. A house built on that will have multiples of that value.

dataviz1000• 2 years ago

I'm curious how much the equivalent modern home would cost in 1950? Also the medium salary has almost doubled. I suspect modern homes are a much better value although more expensive.

immibis4• 2 years ago

If it was significantly cheaper, I'd do my own plumbing. Wouldn't you? Much better than having no home at all. But it's not even an option - I'm required to pay for the plumbing.

jbverschoor2• 2 years ago

What kind of inflation? Bc inflation numbers are artificial and are often doctored. Like here in NL where they conveniently adjusted the "basket"

willcipriano• 2 years ago

You don't have teams of economists go over your grocery list to minimize inflation?

Next you'll tell me you can't eat iPads.

jbverschoor2• 2 years ago

It has an apple on it

ta12432• 2 years ago

Inflation figures in all manner of goods are available, at least in the UK, I assume in your country too.

A "basket" is chosen as a realistic example of how a typical person spends their money. Your personal "basket" is going to be different to mine.

If you don't think the typical basket is representative, then be honest and come up with your own basket and work out what your personal inflation is.

Some will have inflation far higher, others will have it far lower, that's the nature of a generalised number.

None of this means that the figures are "doctored"

foogazi3• 2 years ago

I wonder how the price per sqft has changed, anyone have that ?

foogazi3• 2 years ago

Doing median price over CA makes no sense

mlyle3• 2 years ago

It makes a lot more sense than doing the mean.

The typical home is a reasonable basis for comparison.

foogazi3• 2 years ago

California is so big and vast - it’s like 6 states.

All the high prices “now” are concentrated on the coast - where was that wealth 80 years ago ?

Homes now are probably 3 times as big as before

KaoruAoiShiho• 2 years ago

Can this be compared to the S&P 500?

ta12432• 2 years ago

No, the S&P500 wasn't formed until 1957

tempestn3• 2 years ago

You could use the Dow though. It varied from 2700 to 2900 in 1950, and is now about 45,000, so about a 16x increase, while inflation over the same period has been about 30x. However the index price doesn't account for dividends, so total return has been much larger.

corentin882• 2 years ago

Now the next question is why? Why the houses prices have surged in the past decades. And why is it a worldwide situation (at least in developed countries)?

hijinks• 2 years ago

too many people and not enough land in areas where people don't have to drive 3 hours to work.

Want pricing to go down then we need to build more dense housing even an hour drive from the city. The days of wanting a big backyard are coming to an end for most home owners.

freeone3000• 2 years ago

What if we put the jobs closer to the people instead of making the people get closer to the jobs? Just drop a big ol’ tech park in the middle of Oakland?

CrimsonCape• 2 years ago

I often see comments in the theme of "dense housing is the panacea."

You can't really run power tools in dense housing, correct? Or fix stuff yourself? Sounds awful.

marcosdumay2• 2 years ago

Want pricing to go down then we need to build more dense housing

You need mass transit and transport integration. House density can only move you so far (and it's not very far).

AdrianB1• 2 years ago

That is easy:

1. bigger houses

2. a lot more equipment in it: electricity, plumbing, AC

3. zoning restrictions reducing supply to increase the value of existing houses; owners benefit from that, local government benefits even more from higher property taxes and also from permitting taxes

4. increase of demand due to different factors, like lifestyle changes (back then almost nobody lived on their own in a house, single people were very rare by comparison), unequally distributed immigration and internal migration to some cities)

5. very different and more expensive safety requirements for new houses

6. more expensive workforce building the houses

7. huge reduction in self-building houses and price gouging by the developers

and more

betaby• 2 years ago

1. bigger houses

also 300 sqft condos.

sqft per person hasn't changed much since 1980s.

thisislife22• 2 years ago

It's not just "developed" country problem any more. It is also happening in developing countries, like India and Vietnam for example. In India, real estate prices have sky rocketed over the past 30+ years. Part of this is because of the rise of property development firms. Government encouragement too has played a role, I think, because construction (and the construction industry) does create a lot of jobs. Real estate is also a vehicle to hide black money, and that's another factor here in India.

(I wanted to strangle Trump when he once commented that real estate in India and other parts of Asia, are still "undervalued"!)

corentin882• 2 years ago

Should have say "high-income countries" instead of "developed" countries. Thanks for pointing that out.

Had no data for low/middle income countries, but thanks as well for reporting that it’s a global issue.

tokioyoyo3• 2 years ago

More people want to live in the city than ever in the history of humankind for various reasons. See gigantic rental price drops in mid-2020 when people briefly thought city-life will never return to normal. Housing prices mostly went up during the year, but they're much stickier than rental and that flight didn't last long enough for people to sell their homes (well, it's much easier to drop your rental for another, than sell and buy somewhere else).

When demand starts slowing down or supply is caught up (it's happening everywhere outside of Tokyo in Japan, and somewhat in HK and other places as well), they stabilize or go down.

partiallypro3• 2 years ago

New home sales are at a near 30 year low at this very moment, at least in the US. No one is really buying, but prices are still inflated drastically. The people that -are- buying homes, are people that already have them. Houses in rural and suburban areas are also super inflated as well. It's not just a city phenomenon. There is clearly something very broken in the market. It really comes down to NIMBYs, entrenched interests and ZIRPs massive distortion of the market that locked a ton of people into a low rate.

Many current homeowners have their wealth in their home, they want it to (in some cases) to continue to out-perform the S&P 500. Since they live there, they bully the local governments to not allow more building so there is less supply to compete with their asset. State and federal agencies are going to have to step in at some point to incentivize local governments to upzone. Not even mentioning this isn't remotely sustainable as a tax base in most instances, because subdivisions and infrastructure to deal with the sprawl this a bill that will come due in a harsh way making higher property taxes inevitable pricing out many of the people that were in. The #1 reason people are fleeing California and New York is due to costs...and in turn they are about the lose electoral power in Congress and Electoral college.

zackmorris• 2 years ago

My take as someone living in the northwest and witnessing exponential growth over my lifetime:

  - We clearcut 95% of US timber, now the remaining 5% is in states like Oregon, Washington and Idaho. Some wood is an order of magnitude more expensive or simply unavailable, with prices held artificially low by importing wood and deforesting Canada, for example.
  - Good, fast, cheap (pick any two). We build homes good and fast, but little effort is being made to reduce costs by an order of magnitude by using materials like hempcrete.
  - Zoning laws have been changed so that row houses and 3-4 story apartments can be built right up to the road, maximizing profits but externalizing urban decay. High price/low value.
  - The US adopted a service economy when it sent 100,000 factories overseas under the GW Bush administration in the 2000s after Clinton signed NAFTA in the 1990s. Now a smaller fraction of the population does the work of building homes, with most everyone else pushing paper, so charges what it wishes.
  - People with high carbon footprints had more children. Bigger houses for high consumers left less housing for thriftier people.
  - Garages, lawns and commuting wasted immeasurable resources after we could/should have transitioned to sustainable energy and transportation in the 1980s but chose to double down on the nuclear family, trickle-down economics, etc.
  - The cost of those unnecessary roads was factored into property taxes, driving home prices higher.
  - Nearly unlimited financing was available for home loans, while almost none was devoted to startups and other disruptive industries. We got what we paid for (McMansions instead of, I don't know, 3D printed homes).
  - Modern techniques were almost never adopted into building codes. So rather than running wiring conduit through walls or encouraging similar practices to make additions and remodeling easier, we encouraged tearing down and building from scratch, which wasted countless trillions of dollars.
  - The tax system doesn't value trees, existing structures, previous money spent on remodels, etc. So developers profit from bulldozing homes and razing lots in a day to build houses in a month. The human and environmental cost of that can never compare to moving homes, remodeling them, etc.
  - Our culture and entertainment tell everyone they need granite countertops and $50,000 gas guzzlers. Things are expensive because other people consume more and more and more with insatiable appetites and expectations.
  - Wealthy people who could have steered our culture in a positive direction chose to do nothing. Or worse, actively encouraged extractive and vulture economic policies to enrich themselves further.

plaidfuji• 2 years ago

I suppose what this illustrates is that, while the CPI does include rent (or “owners equivalent rent”) in its calculation, the equivalent rent is either not representative of the median home, or house prices have grown much faster than rent over the past 75 years… and yet the apparent popularity of being a “real estate investor” seems only to have increased, which suggests to me that the rent/buy ratio has gotten more favorable, not less

ajross4• 2 years ago

None of the above, the disconnect is that median income has risen (much) faster than inflation in the last seven decades. See my comment elsewhere. The whole post is an exercise in failing to recognize confounding variables.

ajross4• 2 years ago

This is still a bit spun though. Median income has risen even faster!

Some quick unverified googling says that in 1950 US Median income was $3300, and that inflation since 1950 has been a 10.89x increase. US median income today is $80k.

So indeed, housing has gotten a lot more expensive in real terms. But we've all gotten richer, and on average A US Household is spending less of its income on housing today than in 1950, not more.

California, it's true, is sort of out of control. But that's clearly a local thing in two metro areas, not a problem with the economy as a whole.

tikkun• 2 years ago

It's almost as if supply has increased slower than demand.

xenospn2• 2 years ago

They’re making too many people.

mdtancsa2• 2 years ago

Would be useful to see the cost of just the land as well if thats possible. As others have pointed out, the size and feature expectation inflation has to be factored in here. The little "wartime 4" I grew up in north of Toronto was smaller than a lot of "garage-ma-halls" these days and didn't really have insulation. It was a regular feature in winters to get ice on the living room window. My "modest" (by today's standards) house would be a rich persons place in the 70s.

bluedino• 2 years ago

My garage (22x30) is over half the square footage of the house I grew up in. Which didn't even have a garage. Yard is three times as big as well.

llm_nerd• 2 years ago

That kind of goes both ways, though.

I live in an affluent suburb in a rich city in a sleeper town just outside Toronto. My home was built in the past twenty years and is in a "McMansion" style neighbourhood. It's a relatively large home, but in many ways things have regressed.

Craftsmanship is non-existent. The kitchen cabinets look like Ikea specials with shelves held up by little plastic pegs. All of the various particle board doors are installed laughably poorly with giant gaps. Sound travels through the home with ease.

It's well insulated and has good multi-pane windows, but automation and mass production should bring a lot of that just with the passage of time. I would expect that all else being equal the same work should by better windows and insulation and so on than fifty years ago.

Regarding land value, it is interesting how in denial we are about land values. The city gives me property tax statements valuing my land at 1/10th the price of the dwelling...yet people are buying $1M homes on smaller lots and immediately tearing the home down to build new. More than a few cases of that demands that we completely upend our valuations.

seanmcdirmid3• 2 years ago

There is an equation they use that might be biased toward improvements. In Seattle/King county at least they are gradually changing the equation to value land more and improvements less, so our property taxes have been going down each year even though our value is going up (since we are a narrow townhome on a small plot). This is to ultimately encourage more density and make it more expensive to hold unimproved land.

mdtancsa2• 2 years ago

I think quality is something at least there is choice on. But even then, the lowest quality of materials now seems way above anything my 1940s war-time-four that I grew up in in Willowdale. It was just tarpaper "brick" over the frame. We didnt feel "poor" or anything as thats what all the houses were. I was lucky to buy my first house in 97 at the bottom of the market in Waterloo. An 1890s house on a 133x66 lot. House was absolute mishmash of "left over parts" as one contractor friend of mine described it. My wife and I saved up and did a full teardown in 2016 (again as luck would have it) at a low point in construction costs. My general contractor said it would now be 3x to do the same project due to labour and material costs. But, going through the process I could do anything I wanted. Fresh timber, or timber that was properly aged. Steel beams, or wood. You can choose "quality" it just is gonna cost. But that 3x jump (not even taking into account land costs) pre-covid vs post covid is.... eye popping.

soared• 2 years ago

Your windows likely would still ice up today, except they are double pane with argon or another gas inbetween the panes so they are comparatively insanely well insulated.

hervature• 2 years ago

What these analyses normally miss:

- Building codes have changed. Things are much safer now than in the past. The chance of dying in a fire has decreased 1/4 since 1950 [1].

- Houses are much bigger. Houses have almost tripled in size [2].

- Quality of finishes have increased. People will probably debate me on this because things have generally gotten cheaper over time but that means that the expectation for a house now is quartz countertops and not vinyl.

- Desirability has changed. For example, the number of sports teams have tripled since 1950.

[1] https://www.statista.com/statistics/526310/timeline-deaths-n...

[2] https://www.ahs.com/home-matters/real-estate/the-2022-americ...

mistermann• 2 years ago

It's a valid and good point, but it's also important that there is very often no other option available in new construction.

SoftTalker4• 2 years ago

When the zoning/permitting process limits the building of new houses, builders are going to build what gives them the biggest return: large, luxuriously finished houses.

TheGamerUncle• 2 years ago

sorry what do you mean by saying "Desirability has changed. For example, the number of sports teams have tripled since 1950." ? I am like not American and I do not get how that is related to housing

ziddoap12• 2 years ago

If I understand correctly:

Houses near desirable locations (e.g. sports stadiums) are more expensive. There are more of those desirable locations now (more sports teams = more sports stadiums). So the average is driven upwards even with no change to the housing itself.

xnx• 2 years ago

Not only an increase in square feet, but an even bigger increase in square feet per person.

cj• 2 years ago

Let’s go further and:

- take the average household size in 1950 vs 2020 to calculate median house price per person in a household

- then take the average square feet per person and find out what % it has increased in the past 75 years

Then layer those stats on top of the inflation adjustments to hopefully remove some of the confounding factors?

steveBK123• 2 years ago

Yes exactly - my parents and inlaws had homes 2x the size of what they grew up in, and also had half the children their parents had.

xenospn2• 2 years ago

The size of a single person has also increased. Considerably.

mattnewton11• 2 years ago

I think this is likely a distortion caused by zoning regulations, resulting in "missing middle" housing.

Basically, if you are only allowed to build single family housing on a plot of land, it doesn't make sense to build anything other than a large luxury home.

ziddoap12• 2 years ago

I definitely agree that there's much more to housing prices than most simple analyses present.

Some food for thought in the other direction, though:

- Tools (e.g. nail guns, paint guns, concrete finishers, horizontal drilling for utilities, etc.) and materials (e.g. pre-engineered trusses) are significantly more efficient, so labor costs can be reduced which should drive pricing down. At least enough to offset changes in building codes, but likely more.

- Triple house size does not equal triple building costs.

- I would definitely debate on quality of finishes. Some might be better, but plenty is worse. For example, crown moulding is not as common (in my experience), and skirting is typically much cheaper, and I rarely see chair rails anymore. More often than not I see vinyl floors replicating wood instead of real hardwood floors.

RAdrien• 2 years ago

Productivity in building construction has not improved much, according to data, even if tools have improved.

Even if tripling house size doesn’t literally triple costs, that is a straw man. It certainly must account for some of the cost increase.

seanmcdirmid3• 2 years ago

Crown molding only it isn't common anymore because it isn't very desirable.

I wonder if we could do housing the Chinese way and just give people a concrete box to renovate (houses aren't sold new renovated in China, and you are expected to do your own re-renovation after you buy a house second hand), but that really hasn't helped housing prices over there very much.

neverartful3• 2 years ago

The use of pneumatic nailers has substantially reduced the time required to frame a house.

Regarding labor costs and productivity, there is vastly more specialization in building a house now than there was in 1950. I suspect that in 1950 you only had a few types of skilled labor involved: carpenter, electrician, plumber, and maybe a flooring person (the flooring may have also been done by carpenter at that time). Now, there are additional specialties that need to be involved - roofer, concrete, HVAC, tile, countertop, appliance, etc.

tempestn3• 2 years ago

Also while houses are generally larger, lots are generally smaller, and often comprise the majority of the value.

legulere• 2 years ago

Efficiency gains only lead to lower prices if they are bigger than wage increases. And those are driven by efficiency gains of the rest of the economy. Sure you can gain here and there some wins, but in the end construction is still a very labor-intensive job.

tayo42• 2 years ago

My budget was around a million, idk if I saw a single home (sfh, Townhomes, condos) that had wood floors

l1tany11• 2 years ago

The things you are pointing out are largely styling choices. The difference in quality of finishes are, like mentioned, solid surface quartz counters which are basically stain proof, large porcelain tiles, toilets that flush more effectively, low voc paints, engineered wood flooring that doesn’t warp and creak, etc.

dmarlow• 2 years ago

How about two of the most cost impacting elements in home building, cost of labor and land?

brightball• 2 years ago

My grandmother compiled a book of letters from families in my hometown that she gave all of the grandkids a copy of before she died.

One of the letters talked about how common fires were and how the standard practice was to just pull up a chair in the middle of the street and watch it burn.

jhrmnn• 2 years ago

Looks like normalizing to price per sqft might make the price flat at least in some parts of the US? I always debate with my brother, an architect, why people consider an 80-sqm apartment big enough for a family of 4 (Europe), but wouldn’t aim below 150 sqm when considering a house.

gred• 2 years ago

If you asked me whether I would want to pay 5x more for a house that reduces my likelihood of dying in a fire from 0.00427% to 0.00104%, I think I would choose to roll the dice (and maybe DIY install a $20 smoke detector).

1950: 6,405 fire deaths / 150,000,000 US pop = 0.00427%

2022: 3,490 fire deaths / 335,000,000 US pop = 0.00104%

ziddoap12• 2 years ago

Death is not the only negative outcome of a house fire.

SoftTalker4• 2 years ago

These are guesses but I think the main reduction in fires from 1950 to 2022 are:

a) better electrical wiring and circuit provisioning. Overloaded outlets or circuits were more common in the 1950s. Fuses could also be tampered with more easily than circuit breakers.

b) Matches everywhere. You had matches in the kitchen for lighting the stove, and around the house for lighting cigarettes. "Kids playing with matches" was a common cause of fires. You don't hear about that nearly as much today.

cogman102• 2 years ago

Are you sure it's a 5x difference in material?

Like, a big reason for fires in the 50s was paper covered and underspeced wiring.

Safe wiring simply uses plastic instead of paper.

jjav3• 2 years ago

Houses are much bigger. Houses have almost tripled in size [2].

I know the numbers support this but I always wonder why my observations are so different.

When growing up (I'm Gen X) all my friends houses and mine were pretty big. Most of us were lower middle class so these were cheap houses. Land was dirt cheap so houses used the space and still had huge yards. Houses were simple, but spacious.

By the 90s houses had shrunk, since now land was quite expensive so builders had less space.

All the construction going on right now in my town is even tinier, since land prices have skyrocketed, so builders have the incentive to stuff as many tiny units into tiny plots as possible.

So, where are these 3x larger houses these days?

cammikebrown• 2 years ago

The big houses are REALLY big. And, while I can find a small apartment, new homes under 2000 sq ft are tough to find. The house I grew up in was 1500 sq ft and plenty for a family of four. I wish I could own a 1100 or less sq ft home but they’re all very old

ipython2• 2 years ago

I just had this conversation with my grandmother today. She was describing her own grandmothers house- and how huge it was. The large bedrooms, a whole room dedicated to the telephone even! The way she described it, it was a straight up mansion.

I was curious what this house looked like, so I asked the address. Looked it up on Redfin. It was less than 2400sq ft. The house she was standing in and comparing to was twice that size.

slv77• 2 years ago

Much of the US housing stock includes homes built before 1990 (30 years ago). If most of the median home price increase was due to build quality there would be a bimodal distribution of housing appreciation with newer homes having appreciated more than older homes.

Most of the appreciation in housing is due to higher household incomes due to two income households.

sir0010010• 2 years ago

I would change your last sentence to: is due to higher household incomes due to two income households without a similar increase in the supply of housing near where jobs are.

beala• 2 years ago

Why bimodal? Houses are being built every year. So maybe houses built in 2023 have appreciated 1% more than in 2022, and those have appreciated 1% more than 2021, and so on, leading to a smooth distribution.

partiallypro3• 2 years ago

How much of the dying in a fire decrease is just because of decreased smoking, and the use of smoke alarms though?

pllbnk• 2 years ago

Things are much safer now than in the past.

I wonder, should arguments like this be used to justify the issue? With technological advancements things should become better (i.e. safer in this case) without raising inflation-adjusted costs. Wouldn't it be very similar to saying that processors should have become more expensive because they became faster or hard drives because they have larger capacity? Additional costs built into the new codes should decrease over time as builders become more efficient at implementing them or technological advancements allow them to become more efficient.

tpmoney3• 2 years ago

Not every safety item is necessarily an extra expense due to inefficiency. The simplest example would be electrical wire. 2 lead, paper insulated aluminum wire is less expensive than 3 lead PVC insulated romex, regardless of manufacturing efficiency. There's not a lot of modern AL electrical wire for price comparison, but Home Depot lists a 1000ft spool of #2 AWG USE-2 AL wire from Southwire for $0.80 / foot. The same spool from the same manufacturer in CU is $2.32 / foot. So while not a perfect comparison, if you imagine going from a 1950's 2 wire AL situation to a 2024 3 wire CU situation, you're talking a baseline price increase of over 4x with modern efficiency. And that's before you consider that modern building codes also require many more outlets and circuits than they used to. My home, built in the 70's has 3 circuits in the kitchen. 1 counter top, 1 fridge, 1 range. IIRC the modern building code is 1 circuit for every hard wired appliance, 1 for the fridge, 2 accessory circuits and a circuit for the room walls in general. If you assume a modern house with a fridge, range, dishwasher and over the range microwave/hood combo, that's 7 circuits minimum for the kitchen. So in addition to the 4x increase in wiring costs for the existing circuits, you also have a 2x increase in the number of circuits for just that room let alone outlet spacing requirements in other rooms and the like.

tpmoney3• 2 years ago

It would also be interesting to see the numbers relative to mortgage rates and availability. It looks like the 1950's had mortgages starting around the 5% range, but that steadily increase to a peak of near 20% in the 80's before dropping through the 90's and bottoming out around 2.5% in 2021. Along with that I imagine qualifying / getting a mortgage in 1950's was more difficult than modern times with 0% down first time home buyer loans.

angmarsbane3• 2 years ago

Houses are bigger, but seem less thoughtfully designed with a lot of useless space that seems to be there to maximize the sq. footage to justify high prices.

willis9363• 2 years ago

Hard no. I've been going to many open houses and there is a strong trend towards more functional layouts over time. The 1940s houses might have a large number of square feet, but the % of that taken up with unusable walkways and narrow rooms is much higher than things built later. 1960s era is better, 1980s better still, and best of all are new builds.

sn9• 2 years ago

Median cost per square foot might be more informative.

mattnewton11• 2 years ago

I disagree, each marginal square foot is not equivalent. (Access to owning the first few hundred over zero are in particular market is very important!) I think overall housing supply vs overall demand is still a useful way to look at it, because it captures how we're under building cheap housing.

blargey• 2 years ago

- Surface-level "finishes"

- Square-footage-maximizing floorplans, with a 3-foot wide lawn that your HOA still wants in pristine condition

- "Open floorplans" so you can listen to the roar of your dishwasher, washer, and dryer from the comfort of your living room (is it cheaper to get rid of interior walls and doors?)

- Mandates to use more-fireproof sticks and boards, and non-carcinogenic insulation

- Incremental improvements in the technology of home appliances, no thanks to home-builders

I hate that's the sum of "progress" in housing quality. I wish more expensive homes meant something more than extra bedrooms with the same race-to-the-bottom construction and townhouse-level neighbor-separation as the next development.

mattnewton11• 2 years ago

This can't be it, much of the housing stock is from pre 1950s and adding those finishes or code improvements does not make a house 5x as valuable.

My theory is that we simply don't allow building anywhere near the rate of increasing demand, which is reflected by the anemic supply growth compared to population increases.

claaams• 2 years ago

Signs of a healthy economy and growing middle class!!

thisislife22• 2 years ago

Or a huge warning sign of the wealth disparity between the rich and lower-income group - it's a reality that lower middle-income group today cannot afford to buy homes; they are lucky if they can inherit one.

mempko• 2 years ago

That's not what the data says. https://www.pewresearch.org/social-trends/2020/01/09/trends-...

Income and wealth inequality is increasing, not decreasing. Meaning people's quality of life is decreasing.

cyberax• 2 years ago

TLDR; it's the density death spiral.

The most expensive part of a house is the land it stands on (which also determines the building codes and the local labor price).

HumblyTossed• 2 years ago

Does this account for sq ft? Mobile site isn’t easy to read.

stouset• 2 years ago

Houses can be a good investment or they can be cheap.

A good investment outperforms its alternative asset classes. We chose policies that ensured they’d be a good investment. For housing to become cheap in our lifetimes, existing homeowners will need to experience an enormous capital loss.

This has been exacerbated by the long-term decline of interest rates. Sticker price and interest rate are roughly inversely correlated since the monthly payment a prospective owner can afford is roughly fixed. Over the past fifty years, boomers have been able to regularly refinance their loans into lower and lower interest rates as prices skyrocketed. This also made it easy to move since you could trade up on your home’s increased value relative to the remaining mortgage.

That pathway isn’t as available to millennials who bought at sub-4% interest rates, and it likely never will be.

casenmgreen2• 2 years ago

    > Sorry, you have been blocked
    > You are unable to access kinsta.cloud

No page for you Tor users.

brutal_chaos_• 2 years ago

Using the Tor Browser, I kept trying "New Circuit" and it eventually showed the page. It took ~6+ tries though

casenmgreen2• 2 years ago

I may well be completely wrong, I am not a social scientist or involved with the housing market; my sense of it is that building has been ever harder, while demand - more people with more money - has continued to rise.

Prices, accordingly, have risen.

I think what we see here is primarily a function of constrained supply.

dukeofdoom• 2 years ago

Depends if it's a liability or not. For many it's like a big savings account. The bigger the better. Inflation protected. You can't trust the government not keep printing more and more money and diluting your after tax savings. But house prices are linked to physical structure. Government can't just print more houses out of thin air. So they appreciate against inflated paper currency which they do just print out of thin air sometimes.

Also, having owned older built Canadian houses, they're a constant maintenance. Many were not well designed and don't age well (wood construction). So for them to still appreciate tells you how much government has been busy printing. Where does all that money go? I sometimes wonder.

Indebted servitude to banks, a good chunk of a lifetime of work to pay off one of these mortgages. And waging so government can take most of it in taxes. I'm not sure if this is sustainable much longer without a revolt in Canada... at least younger Canadians may one day decide it's not a good system and turn the tables. Average house price in Canada is like 700k now, average wage is like 54k.

WealthVsSurvive• 2 years ago

The short answer is that a house is no longer a place to live, but an abstract financial asset. The problem with divorcing occupation and use from finance and ownership concerns remediation of grievances. The benefit of such a system concerns maximizing the building's utility. I'm personally in favor of a more boring housing market, in addition to automatic tenant enrollment in equity-sharing programs (ie, due to living in a building and paying rent, the person who experiences hardship and loses tenancy still has some small, depreciating ownership based upon what they paid as rent). This helps solve the problem of financial engagement for the less financially literate, in addition to enabling higher-density housing to be built.

tmountain• 2 years ago

This sounds interesting. Where is it typically put into practice?

mcdeltat3• 2 years ago

Bingo. People love to go into some deep analysis of housing and "agh it's a really hard problem", but it's simple at the end of the day: we have constructed, and continue to construct, a society where housing is not considering a right, but instead a way to inflate your bank account. It smells like this from the prospective house buyer at the bottom all the way to the government propping up the system at the top. Time to change the system. I refuse to believe that out of all the great things humanity has achieved, effective housing (shelter, of all things!!) is unsolveable.

toomuchtodo6• 2 years ago

The system will not change because the folks in charge profit and maintain power from a system of accelerated financialization. They then wring their hands and clutch their pearls as young people take rational actions by not having children (rapid fertility rate decline), worried what happens to the pyramid scheme as it runs out of steam. Their crisis is the young cohort's survival mechanism.

Young people have to do their best to survive in an unfavorable macro for the life they have left, and old folks age out eventually (which is the only way they give up power, the power which is needed to make change to improve the macro).

https://news.ycombinator.com/item?id=40338619

https://www.ted.com/talks/scott_galloway_how_the_us_is_destr...

https://www.youtube.com/watch?v=u-PinTQcuik

https://www.axios.com/2024/07/25/adults-no-children-why-pew-...

boogieknite3• 2 years ago

Im a rube but it my knee jerk reading tfa is there has to be some correction or young people are financially and domestically doomed. The solutions you listed here seem great. Is there momentum behind establishing these in the US?

Is it more likely the trend continues and young people will simply become priced out, or is a correction more likely? If the latter, what are smart people expecting?

frmersdog4• 2 years ago

You are correct.

Is it more likely the trend continues and young people will simply become priced out, or is a correction more likely?

As a layman, take this with a huge grain of salt: it depends. By established rules, a major correction should be imminent. In fact, it should have happened one of several times already.

Examples of catalysts include a bond liquidity crisis in late 2019, the flash crash at the start of the COVID pandemic, the Gamestop debacle in early 2021, the collapse of the Chinese real estate market later in 2021, and the US bank collapses of early 2023. There are also others, though several venture into conspiracy theory territory.

In every example I mentioned, unprecedented action was undertaken to prevent a catastrophic event that might have lead to financial contagion across global markets. There will be probably be more. It remains to be seen whether authorities will continue undertaking steps to shore things up when the bubble threatens to pop. (Trump's return to office is an interesting wrinkle; grab another grain of salt, but it's my opinion that the Gamestop thing only got as bad as it did because the regulatory regime under his tenure was asleep at the wheel.)

It should be noted that a correction doesn't necessarily lead to affordability if purchasing power simply continues falling or remains stagnant, as a result of a weaker job market. There are people who believe that sellers will simply refuse to drop residential real estates prices, as they have with commercial properties. Consolidation of ownership under large entities - as we've already seen to some extent - would allow owners to simply squat on properties, perhaps renting then out. Who knows what happens to the algorithmic rent fixing lawsuits, that might have brought those costs back to Earth a bit, after this year's electoral red wave.

DrillShopper• 2 years ago

Every time there is the potential for a correction (2008 being close to mind) the government just hands the banks a ton of taxpayer money because they're "too big to fail".

So I wouldn't expect a correction until the US is unable to borrow more money or defaults on its debt.

Much like climate change it will already be too late by the time young people have the power to change it. So I'm not surprised many of them have sort of checked out from the "spouse/house/kids" grift/grind

deadbabe• 2 years ago

People don’t have the right to simply live in highly desirable areas for very cheap.

It is time for people to accept that if they want affordable housing they should look at some lesser developed areas in the country. Otherwise it’s pay to play.

tantivy• 2 years ago

What happens in society when every city is filled with the retired rich and zero actual workers?

boogieknite3• 2 years ago

been noticing this for years.

solar and starlink keep on improving. i continue to be surprised remote work communities arent commonly developing in scenic, non-traditional locations. it seems idealistic, but makes a lot of sense on paper

cheema33• 2 years ago

In my city, the homeless are offered free housing that is away from the downtown area. They do not want it. Preferring instead to camp in downtown where they want to be.

Cheaper housing is available if people are willing to move to less densely populated areas.

At the end of the day, housing is all about supply and demand. Like most other things in life. There is not enough supply in the areas where people want to live. And no country has been able to figure out a solution for that problem.

frmersdog4• 2 years ago

And the jobs? The amenities that make areas highly desirable require workers who can actually commute to them.

It's a game of chicken. The people who live in these areas and expect to be served without complaint either acquiesce to density and lower property values, or risk (occasionally fiery) demonstrations against the unfair and unworkable situation. Their goal is to keep the game running, so that everyone else doesn't decide on one or the other end state. Essentially, "Highly desirable areas that are too expensive for low/middle-income workers," is a transition state.

angmarsbane3• 2 years ago

People don’t have the right to simply live in highly desirable areas for very cheap - I find that it's less people can't afford to live in their dream locations as people can't afford to live where their jobs are, or within reasonable commuting distance.

mcdeltat3• 2 years ago

What about when housing is equally unaffordable in the less desirable areas? Keeping in mind that wages are probably less in those areas.

Also, less desirable areas are not necessarily constructed to be any more functional or sustainable, so why should we promote that? Areas that are "less desirable" in my city are swathes of oversized, copy-pasted houses massively spaced apart with near zero amenities. 100% car dependent. Near-dystopian land use, really. We don't need more of that. Instead, I'd much rather take amore sustainable approach to housing across the board.

saulpw• 2 years ago

There is nowhere someone can live for $200/mo, as they could in some lesser developed countries. The floor has been established by speculation, building codes, and minimum services. It sounds like a good idea to make sure all dwellings have electricity and running water, but when the alternative is a tent under the freeway, it's actually much worse.

mattnewton11• 2 years ago

We're past that and to the point of neighborhoods voting against any development and supply increase.

xienze• 2 years ago

The short answer is that a house is no longer a place to live, but an abstract financial asset.

This line of thinking is commonly repeated, but it fails to take into account the old “location, location, location” thing. If you bought a house that was once in the middle of farmland 30+ years ago but now that house is on (let’s say) two acres of land in the middle of a coveted suburb of a large city where the average house sits on .2 acres, why _wouldn’t_ that house (or more accurately, the land) have appreciated greatly in value?

A LOT of these houses that “boomers” bought were once out in the boonies, and now those places are desirable, developed areas.

bigtex88• 2 years ago

Henry George is screaming from his grave. We know how to fix these sorts of problems but we will never take the steps to actually fix them.

blindriver2• 2 years ago

There should be no tax on selling a primary residence if and only if you buy another primary residence. Otherwise tax it like capital gains or higher. Make it economically unfeasible for people to own more than one house. I’m generally a capitalist but i’m okay with this because the housing situation is ridiculous.

Hedge funds and other corporations should be disallowed from purchasing single family homes. Period.

ipython2• 2 years ago

This is all well and good but as someone who just went through a renovation, the cost of labor and materials is astronomical. Yes the land is expensive too but it’s not like it was free to get construction crews out either.

So while it is a financial asset, the cost is still tied to the cost of physically constructing the thing.

Eddy_Viscosity2• 2 years ago

Another short answer is that actual inflation could be much larger than the "official" inflation numbers use for these calculations.

masto• 2 years ago

The part I found strangest about the house-buying process (in 2015) was that the real estate agents, mortgage brokers, etc., had a fundamentally different conceptual framework than we did. I thought we were looking for a place to put our stuff, where we would stay basically permanently. They were assuming we'd sell it in 5-10 years. I didn't understand this unstated premise at first and it led to some confusing moments.

seryoiupfurds2• 2 years ago

If 101 people want to move to a city that has 100 houses, and they are prevented from building more, then house prices will be bid up as high as they can afford to pay.

The only solution is to legalize building more homes, especially at higher densities that allow more people to live in desirable locations.

partiallypro3• 2 years ago

Upzoning is the only way, most of the classic neighborhoods we think of are just completely illegal to build now.

tempestn3• 2 years ago

I'd love to see this for Canada; expect it's even more striking.

chung8123• 2 years ago

There has been incredible inflation for items that cannot be exported in the US. Think healthcare, education and housing. Things that could be sent overseas like TVs, Computers, Clothing has seen their prices deflate. The combo of the two is what is called inflation but the later hides the fact we have increased our money supply incredibly since 1950 and that will show in the things that did not find a way to get cheaper.

bdcravens• 2 years ago

It needs to account for the difference is sizes. Average square footage in 1950 was just under 1000 sqft; in 2024, it's more like 2300.

In Texas, for example, the inflation adjusted cost per square foot was $79 in 1950, and about $130 in 2024. Still a steep rise, but a 60% jump instead of the 285% without considering square footage.

mattnewton11• 2 years ago

I think this is largely because of zoning regulations forbidding multifamily homes. If you have to build only a few single family homes on land per zoning regulations, you maximize your profits by building really big homes. But it's hard to separate out how much of it is zoning versus genuine consumer preference for larger homes at larger costs (+ easy access to cheap mortgages for many years) because of the ubiquity of these zoning regulations.

immibis4• 2 years ago

It doesn't matter if you aren't shopping by size. I would like a house (or a generic dwelling unit, but let's call it a house). I don't care the ones today are twice as big as the ones in 1950 - both have the same value to me.

TheChaplain• 2 years ago

I believe these kind of data is slightly misleading, because the price is directly affected by everything else that surrounds building a house these days.

Just some examples zoning/land use, building standards codes (electrical, plumbing, mechanical), permits, compliance, inspections, water, sewage, etc etc.

I am not advocating a wild west for building, but rules & regulations always increases and with that comes more costs.

This of course also drives higher rents, and if you think they are high now...

mattnewton11• 2 years ago

Anecdotally, the biggest driver I've seen in California is the large pushback against multifamily housing and large apartment buildings. In many of the hot real estate markets they would be able to get so much more value out of a parcel with these larger buildings but are forbidden to build them per zoning regulations.

roenxi6• 2 years ago

The US M2 in 1950 was <$300 billion and in 2024 was >$20,500 billion (70x increase). The article is using an inflation estimate of ~13x. The author doesn't give an average but the top 3 states by population (California, Texas, Florida) saw increases of 65x, 39x and 44x respectively.

I think it is more likely that house prices have slightly decreased in real terms and they are tracking closer to the M2 as houses are assets not consumables. This gels with home ownership [0] which is generally stable or higher than usual, it doesn't look like people are actually struggling to acquire homes all that much. Especially since I expect household size is shrinking.

Most of the pain people are feeling is because of the insanity leading up to and flowing from the '07 crisis if the home ownership rates are good evidence.

[0] https://en.wikipedia.org/wiki/Homeownership_in_the_United_St...

briankelly• 2 years ago

Yeah homebuilding got absolutely murdered due to the financial crisis. 2009 was the lowest number of new builds since 1959 and we haven't yet reached the 2005 peak.

https://ipropertymanagement.com/research/housing-starts

mattnewton11• 2 years ago

The wikipedia article you linked showed only a decline of 1% home ownership as defined, but mentions a massive decline in "home equity" down to around 34% owning the home outright - this means that people are struggling to own homes in the classical sense of the word "ownership" to me, and the ownership rates are being papered over by long periods of access to cheap loans.

roenxi6• 2 years ago

The article isn't about how easy it is to own homes though; it is about whether the real price of homes is changing over time.

Article suggests it is, I'm suggesting that the CPI is an inappropriate index to use and I suspect the trend is - if anything - probably in the other direction. Relative to the money printing that has taken place, the real price of homes appears to have dropped a smidgen which is what we'd expect given technology improvements.

I do agree that houses are probably a lot less affordable. All that debt is expensive. But that has little to do with the real value of the house, it depends on how the financial system is architected.

Jensson• 2 years ago

I think it is more likely that house prices have slightly decreased in real terms and they are tracking closer to the M2 as houses are assets not consumables

Still means homes has became much more unaffordable than in the past since you have to use your income to pay for the house.

HDThoreaun4• 2 years ago

Keeping money supply the same in the face of a growing economy leads to deflation. Deflation is the economy killer as it makes it extremely difficult to get a loan so investment grinds to a standstill. What exactly should the fed have done in the decade following 07 when the economy was growing and prices were stable?

roenxi6• 2 years ago

Deflation is the economy killer as it makes it extremely difficult to get a loan so investment grinds to a standstill.

(1) If any economy ever has been killed by deflation, you should include it on the the Wikipedia page for deflation. The list of economies that experience deflation [0] is almost a whos-who of places I'd be happy to live - it is often a precursor to economic success.

I don't argue that it is a good thing, but inflation is actually a way to kill an economy because it can get completely out of hand and regularly does. Deflation isn't and doesn't.

(2) It doesn't make it any harder to get a loan. When making a loan, you estimate the real return (say 2%) and adjust for inflation/deflation. So if there is 1% inflation you loan at 3% and if there is 1% deflation you loan at 1%.

Deflation does put a floor on what people will loan money for. The argument that this is a bad thing is very questionable indeed - why we should want people borrowing investing in low-return activities when they could be not-borrowing and resources could be going into high-return activities is a mystery to me. Lending money doesn't make real-world resources appear out of nowhere.

And again, lending can be good or bad so I'm not arguing against it in the abstract. But encouraging lending in marginal and risky gambits is stupid, it causes regular collapses and seems to me to be be making society relatively poorer. People don't save enough as a starting point, end up broke in their retirement all too often. They shouldn't be punished for putting money aside on top of that.

What exactly should the fed have done in the decade following 07 when the economy was growing and prices were stable?

The election is behind us, people can stop with this silliness. The US economy is obviously not growing. Countries don't put a Trump in charge twice when economies are growing. Global hegemons don't get overtaken by China when the economy is growing. The US has very visibly not been growing strongly for the last decade, it has been papering over cracks with money printing. Maybe that is fine, growth has to end sooner or later.

[0] https://en.wikipedia.org/wiki/Deflation#Historical_examples

immibis4• 2 years ago

There is no evidence that deflation is bad for economies. There is evidence that collapsing economies may deflate, which is different.

blindriver2• 2 years ago

Prices from 1950 is relatively useless because they don’t count the effect of women entering the workforce in the 1970s and 80s. Once women were working en masse in the 1980s house prices spiked because there was now 2 incomes that could be used to pay for the house. This inflation is seen in the data but you can’t see it from this map.

The higher house prices get the more desperate people are to use every cent to buy a house. That’s why things like mortgage tax deduction is useless because that money immediately gets factored into increasing the amount of mortgage you can get and spikes the house prices.

It’s fascinating and sad because we are at the stage now where hedge funds are driving up the prices of single family homes so that millennials and gen z become renters for the rest of their lives.

Salgat• 2 years ago

Makes you wonder how much of that added productivity from women workers was sucked up by the wealthy increasing the disparity.

US house prices in 1950 vs. 2024, accounting for inflation

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