11 ms·

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

135 points by ivewonyoung 2y ago

deleted 2y ago
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Finnucane 2y ago
Now do price-to-income ratio over the same time.
- baron816 2y ago
  Yes, comparing to median household income is the right way to do this. CPI isn’t actually useful in this case.
- notadoc 2y 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 2y ago
    Still not that bad comparing to other countries, like those in EU.
  - Finnucane 2y ago
    To say nothing (apparently) of decades of allowing the wealthy to absorb most of the created wealth of the last few decades.
    - jjtheblunt 2y ago
      I think about this and wonder if it's supported by data. I wonder because no one speaks about the poverty created by the last few decades, which might contradict what you wrote, or might not. I also wonder where one could track creation of wealth and creation of poverty. (living outside income, for example, i think of as creating poverty)
  - ajross 2y 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.
    - Kon-Peki 2y ago
      Steinbeck's books were mostly late-30s, no? Which one are you thinking of? Grapes of Wrath is mostly around Bakersfield, Cannery Row and East of Eden are Monterey/Salinas Valley. I'm not sure of anything set that far north. I have family photos from back in the 50s showing lots of good orchards in the Bay Area. Certainly no dust bowl stuff. If I remember correctly, my grandparents bought their 5BR tract house in Santa Clara in the mid-1950s for somewhere around $15 or $16k, which was ~40% more expensive than the median California house back then. The Bay Area has always been expensive!!!
      - ajross 2y ago
        Ooph, HN is being HN. The point is that California was not remotely exclusive or expensive in the mid-century, it was a target of emigration from the rest of the country for its relative affordability and low density. The point to citing Steinbeck wasn't to claim he wrote about Silicon Valley in particular, it was to show that this effect was well-known to basically everyone at the time. I mean, no, "good orchards" aren't desirable homes, by definition. There's at least an order of magnitude delta in real estate price between the two! And sure, your family found a very nice neighborhood in the south bay. That doesn't mean that South SF wasn't a dump or that Fremont wasn't completely uninhabited. Because my upthread point was, and remains, that you can't look at the history of "desirable homes" over a 75 year scale because by definition desirability changes much more frequently.
- deleted 2y ago
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- em500 2y ago
  The longest history I could find using FRED data is this: https://fred.stlouisfed.org/graph/?g=1BPi3 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 https://fred.stlouisfed.org/series/MEFAINUSA646N and https://fred.stlouisfed.org/series/MSPUS 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 2y 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 2y 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.
jonnycomputer 2y 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 2y 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.
  - mlyle 2y 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.
    - Cumpiler69 2y ago
      >A big part of the issue is that workers stopped benefitting from productivity growth in the mid-1990s. Distributing the benefits of increased productivity to the workers was never part of the capitalist motto. That was what socialism was for.
      - HideousKojima 2y ago
        Capitalism seems to have done a far better job at that than socialism despite not being an overt goal though
        Cumpiler69 2y ago
        It has, because people are greedy and self centered and capitalism exploits this better. Nobody's gonna work harder and smarter if they know they'll get the same outcome as those who don't, as per socialism. That's why Europe is falling behind the US at tech innovations. People aren't gonna put in the risk, the grind and the hours if they'll get the same living standards as a unionized tram driver.
jbverschoor 2y 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 2y 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.
  - jbverschoor 2y ago
    It has an apple on it
- ta1243 2y 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"
foogazi 2y ago
I wonder how the price per sqft has changed, anyone have that ?
foogazi 2y ago
Doing median price over CA makes no sense
- mlyle 2y ago
  It makes a lot more sense than doing the mean. The typical home is a reasonable basis for comparison.
  - foogazi 2y 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
    - mlyle 2y ago
      These first two statements are the exact reasons one would choose to use the median instead of the mean.
KaoruAoiShiho 2y ago
Can this be compared to the S&P 500?
- ta1243 2y ago
  No, the S&P500 wasn't formed until 1957
  - tempestn 2y 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.
    - Uvix 2y ago
      It's tricky to say if the Dow is really a good measure across time like that. Exactly two of the companies on it were there in 1950; the other 28 were added in 1976 and beyond. It's not clear if the price weighting really accounts for that much of a shift in composition.
corentin88 2y 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 2y 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 2y 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?
    - syndicatedjelly 2y ago
      Who is the “we” in that sentence? Is there a Central Planning Bureau that forces “jobs” to be placed in certain locations? What jobs would you place near the people, whatever that means?
  - CrimsonCape 2y 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.
    - tokioyoyo 2y ago
      I was born, raised, lived in dense cities. I've lived in semi-suburban life as well. Unless you're into some hobbies that requires such tools, you just never use it? And when you have to... you just use it? I live in an apartment building in a city, and once a month or so, during daytime, people use tools and it's no biggie. To each their own though. I definitely grew to understand that if someone was raised in rural or suburban life, it would be extremely hard to adjust to hardcore city life, and vice versa. But I don't think we should be blocking build ups for one, if there's demand.
plaidfuji 2y 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
- ajross 2y 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.
ajross 2y 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 2y ago
It's almost as if supply has increased slower than demand.
- xenospn 2y ago
  They’re making too many people.
mdtancsa 2y 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 2y 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 2y 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.
  - seanmcdirmid 2y 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.
hervature 2y 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-number-injury-related-due-to-fire-flames-smoke-in-us/ https://www.statista.com/statistics/526310/timeline-deaths-n... [2] - https://www.ahs.com/home-matters/real-estate/the-2022-american-home-size-index/ https://www.ahs.com/home-matters/real-estate/the-2022-americ...
- mistermann 2y 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.
  - SoftTalker 2y 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.
    - theGnuMe 2y ago
      The luxury finishes are high margin..
    - jjav 2y ago
      > builders are going to build what gives them the biggest return: large, luxuriously finished houses In a lot you could build one largish luxurious home and sell it for 1.5 to 2.0M Or do 8 tiny townhouse units and sell each for 800K for a total of 6.4M I don't see how the single home will ever be more profitable if a builder is doing it. We're seeing a lot of these 8 townhomes per lot (4 on each side with small driveway in between) popping up everywhere, precisely because it maximizes profit per lot for the builder.
claaams 2y ago
Signs of a healthy economy and growing middle class!!
- thisislife2 2y 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 2y ago
  That's not what the data says. https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/ 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 2y 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 2y ago
Does this account for sq ft? Mobile site isn’t easy to read.
deleted 2y ago
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stouset 2y 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.
casenmgreen 2y ago
> Sorry, you have been blocked > You are unable to access kinsta.cloud No page for you Tor users.
- brutal_chaos_ 2y ago
  Using the Tor Browser, I kept trying "New Circuit" and it eventually showed the page. It took ~6+ tries though
casenmgreen 2y 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 2y 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 2y 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 2y ago
  This sounds interesting. Where is it typically put into practice?
- ratmeadow 2y 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.
  - toomuchtodo 2y 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://news.ycombinator.com/item?id=40338619 https://www.ted.com/talks/scott_galloway_how_the_us_is_destroying_young_people_s_future https://www.ted.com/talks/scott_galloway_how_the_us_is_destr... https://www.youtube.com/watch?v=u-PinTQcuik https://www.youtube.com/watch?v=u-PinTQcuik https://www.axios.com/2024/07/25/adults-no-children-why-pew-data https://www.axios.com/2024/07/25/adults-no-children-why-pew-...
seryoiupfurds 2y 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.
- partiallypro 2y ago
  Upzoning is the only way, most of the classic neighborhoods we think of are just completely illegal to build now.
tempestn 2y ago
I'd love to see this for Canada; expect it's even more striking.
chung8123 2y 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 2y 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.
- mattnewton 2y 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.
- immibis 2y 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 2y 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...
- mattnewton 2y 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.
roenxi 2y 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_States https://en.wikipedia.org/wiki/Homeownership_in_the_United_St...
- IAmGraydon 2y ago
  [flagged]
  - mattnewton 2y ago
    I don't think it leads to productive conversation to simply say that people who think there is a problem here are entitled.
- lamp_book 2y 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 https://ipropertymanagement.com/research/housing-starts
- mattnewton 2y 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.
blindriver 2y 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 2y ago
  Makes you wonder how much of that added productivity from women workers was sucked up by the wealthy increasing the disparity.

135 points by ivewonyoung 2y ago

deleted 2y ago

[deleted]

Finnucane 2y ago

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

baron816 2y ago
Yes, comparing to median household income is the right way to do this. CPI isn’t actually useful in this case.
notadoc 2y 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 2y ago
  Still not that bad comparing to other countries, like those in EU.
- Finnucane 2y ago
  To say nothing (apparently) of decades of allowing the wealthy to absorb most of the created wealth of the last few decades.
  - jjtheblunt 2y ago
    I think about this and wonder if it's supported by data. I wonder because no one speaks about the poverty created by the last few decades, which might contradict what you wrote, or might not. I also wonder where one could track creation of wealth and creation of poverty. (living outside income, for example, i think of as creating poverty)
- ajross 2y 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.
  - Kon-Peki 2y ago
    Steinbeck's books were mostly late-30s, no? Which one are you thinking of? Grapes of Wrath is mostly around Bakersfield, Cannery Row and East of Eden are Monterey/Salinas Valley. I'm not sure of anything set that far north. I have family photos from back in the 50s showing lots of good orchards in the Bay Area. Certainly no dust bowl stuff. If I remember correctly, my grandparents bought their 5BR tract house in Santa Clara in the mid-1950s for somewhere around $15 or $16k, which was ~40% more expensive than the median California house back then. The Bay Area has always been expensive!!!
    - ajross 2y ago
      Ooph, HN is being HN. The point is that California was not remotely exclusive or expensive in the mid-century, it was a target of emigration from the rest of the country for its relative affordability and low density. The point to citing Steinbeck wasn't to claim he wrote about Silicon Valley in particular, it was to show that this effect was well-known to basically everyone at the time. I mean, no, "good orchards" aren't desirable homes, by definition. There's at least an order of magnitude delta in real estate price between the two! And sure, your family found a very nice neighborhood in the south bay. That doesn't mean that South SF wasn't a dump or that Fremont wasn't completely uninhabited. Because my upthread point was, and remains, that you can't look at the history of "desirable homes" over a 75 year scale because by definition desirability changes much more frequently.
deleted 2y ago
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em500 2y ago
The longest history I could find using FRED data is this: https://fred.stlouisfed.org/graph/?g=1BPi3 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 https://fred.stlouisfed.org/series/MEFAINUSA646N and https://fred.stlouisfed.org/series/MSPUS 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 2y 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 2y 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.

jonnycomputer 2y 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 2y 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.
- mlyle 2y 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.
  - Cumpiler69 2y ago
    >A big part of the issue is that workers stopped benefitting from productivity growth in the mid-1990s. Distributing the benefits of increased productivity to the workers was never part of the capitalist motto. That was what socialism was for.
    - HideousKojima 2y ago
      Capitalism seems to have done a far better job at that than socialism despite not being an overt goal though
      - Cumpiler69 2y ago
        It has, because people are greedy and self centered and capitalism exploits this better. Nobody's gonna work harder and smarter if they know they'll get the same outcome as those who don't, as per socialism. That's why Europe is falling behind the US at tech innovations. People aren't gonna put in the risk, the grind and the hours if they'll get the same living standards as a unionized tram driver.

jbverschoor 2y 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 2y 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.
- jbverschoor 2y ago
  It has an apple on it
ta1243 2y 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"

foogazi 2y ago

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

foogazi 2y ago

Doing median price over CA makes no sense

mlyle 2y ago
It makes a lot more sense than doing the mean. The typical home is a reasonable basis for comparison.
- foogazi 2y 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
  - mlyle 2y ago
    These first two statements are the exact reasons one would choose to use the median instead of the mean.

KaoruAoiShiho 2y ago

Can this be compared to the S&P 500?

ta1243 2y ago
No, the S&P500 wasn't formed until 1957
- tempestn 2y 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.
  - Uvix 2y ago
    It's tricky to say if the Dow is really a good measure across time like that. Exactly two of the companies on it were there in 1950; the other 28 were added in 1976 and beyond. It's not clear if the price weighting really accounts for that much of a shift in composition.

corentin88 2y 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 2y 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 2y 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?
  - syndicatedjelly 2y ago
    Who is the “we” in that sentence? Is there a Central Planning Bureau that forces “jobs” to be placed in certain locations? What jobs would you place near the people, whatever that means?
- CrimsonCape 2y 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.
  - tokioyoyo 2y ago
    I was born, raised, lived in dense cities. I've lived in semi-suburban life as well. Unless you're into some hobbies that requires such tools, you just never use it? And when you have to... you just use it? I live in an apartment building in a city, and once a month or so, during daytime, people use tools and it's no biggie. To each their own though. I definitely grew to understand that if someone was raised in rural or suburban life, it would be extremely hard to adjust to hardcore city life, and vice versa. But I don't think we should be blocking build ups for one, if there's demand.

plaidfuji 2y 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

ajross 2y 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.

ajross 2y 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 2y ago

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

xenospn 2y ago
They’re making too many people.

mdtancsa 2y 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 2y 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 2y 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.
- seanmcdirmid 2y 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.

hervature 2y 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-number-injury-related-due-to-fire-flames-smoke-in-us/ https://www.statista.com/statistics/526310/timeline-deaths-n... [2] - https://www.ahs.com/home-matters/real-estate/the-2022-american-home-size-index/ https://www.ahs.com/home-matters/real-estate/the-2022-americ...

mistermann 2y 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.
- SoftTalker 2y 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.
  - theGnuMe 2y ago
    The luxury finishes are high margin..
  - jjav 2y ago
    > builders are going to build what gives them the biggest return: large, luxuriously finished houses In a lot you could build one largish luxurious home and sell it for 1.5 to 2.0M Or do 8 tiny townhouse units and sell each for 800K for a total of 6.4M I don't see how the single home will ever be more profitable if a builder is doing it. We're seeing a lot of these 8 townhomes per lot (4 on each side with small driveway in between) popping up everywhere, precisely because it maximizes profit per lot for the builder.

claaams 2y ago

Signs of a healthy economy and growing middle class!!

thisislife2 2y 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 2y ago
That's not what the data says. https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/ 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 2y 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 2y ago

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

deleted 2y ago

[deleted]

stouset 2y 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.

casenmgreen 2y ago

> Sorry, you have been blocked > You are unable to access kinsta.cloud No page for you Tor users.

brutal_chaos_ 2y ago
Using the Tor Browser, I kept trying "New Circuit" and it eventually showed the page. It took ~6+ tries though

casenmgreen 2y 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 2y 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 2y 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 2y ago
This sounds interesting. Where is it typically put into practice?
ratmeadow 2y 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.
- toomuchtodo 2y 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://news.ycombinator.com/item?id=40338619 https://www.ted.com/talks/scott_galloway_how_the_us_is_destroying_young_people_s_future https://www.ted.com/talks/scott_galloway_how_the_us_is_destr... https://www.youtube.com/watch?v=u-PinTQcuik https://www.youtube.com/watch?v=u-PinTQcuik https://www.axios.com/2024/07/25/adults-no-children-why-pew-data https://www.axios.com/2024/07/25/adults-no-children-why-pew-...

seryoiupfurds 2y 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.

partiallypro 2y ago
Upzoning is the only way, most of the classic neighborhoods we think of are just completely illegal to build now.

tempestn 2y ago

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

chung8123 2y 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 2y 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.

mattnewton 2y 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.
immibis 2y 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 2y 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...

mattnewton 2y 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.

roenxi 2y 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_States https://en.wikipedia.org/wiki/Homeownership_in_the_United_St...

IAmGraydon 2y ago
[flagged]
- mattnewton 2y ago
  I don't think it leads to productive conversation to simply say that people who think there is a problem here are entitled.
lamp_book 2y 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 https://ipropertymanagement.com/research/housing-starts
mattnewton 2y 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.

blindriver 2y 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 2y ago
Makes you wonder how much of that added productivity from women workers was sucked up by the wealthy increasing the disparity.