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The big change is the end of any sort of backing in money. The Minneapolis Fed calculated consumer price index levels since 1800 here. [1] Of course that comes

The big change is the end of any sort of backing in money. The Minneapolis Fed calculated consumer price index levels since 1800 here. [1] Of course that comes with all the asterisks we're speaking of here for data going back that far, but their numbers are probably at least quite reasonable. They found that from 1800 to 1950 the CPI never shifted more than 25 points from the starting base of 51, so it always stayed within +/- ~50% of that baseline. That's through the Civil War, both World Wars, Spanish Flu, and much more. Then from 1971 (when the USD became completely unbacked) to present, it increased by more than 800 points, 1600% more than our baseline. And it's only increasing faster now. So the state of modern economics makes it completely incomparable to the past, because there's no precedent for what we're doing. But if you go back to just a bit before 1970, the economy would have of course grown much larger than it was in the past but still have been vaguely comparable to the past centuries. And I always find it paradoxical. In basic economic terms we should all have much more, but when you look at the things that people could afford on a basic salary, that does not seem to be the case. Somebody in the 50s going to college, picking up a used car, and then having enough money squirreled away to afford the downpayment on their first home -- all on the back of a part time job was a thing. It sounds like make-believe but it's real, and certainly a big part of the reason boomers were so out of touch with economic realities. Now a days a part time job wouldn't even be able to cover tuition, which makes one wonder how it could be that labor cost practically nothing in the past, as you said. Which I'm not disputing - just pointing out the paradox. https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1800- https://www.minneapolisfed.org/about-us/monetary-policy/infl...

wahern 7mo ago
And yet the homeownership rate in 1950 was 53% (an all-time high up to that point) compared to 65% today: https://www.huduser.gov/portal/sites/default/files/pdf/Housing-Situation-1951.pdf https://www.huduser.gov/portal/sites/default/files/pdf/Housi... Only 80% of units had private indoor toilets or showers. It is notable that the median monthly rent was $35/month on a median income of $3000, so ~15% of income spent on rental housing. But it's interesting reading that report because a significant focus was on the overcrowding "problem". Housing was categorized by number of rooms, not number of bedrooms. The median number of rooms was 4, and the median number of occupants >4 per unit (or more than 1 person per room). I don't think it's a stretch to say that the amount of space and facilities you get for your money today is roughly equivalent. Yes, greater percentage of your income goes to housing, and yet we have far more creature comforts today then back in 1950--multiple TVs, cellphones, appliances, and endless amounts of other junk. We can buy many more goods (durable and non-durable) for a much lower percentage of our income. There's no simple story here.
- somenameforme 7mo ago
  What an interesting paper you found! Home ownership stats in contemporary times are quite misleading because of debt. Most home owners now are still paying rent in the form of a mortgage to a bank. In the 50s most home owners genuinely owned their homes 'free and clear'. The exact rate was 56% in the 1951 per your paper (which was a local low), and now it's at 40% which is a local high. And the contemporary demographics are all messed up - it's largely driven by older to elderly individuals in non-urban low-income states. As for number of occupants, the 50s had a sustainable fertility rate. That means, on average, every woman was having at least 2 kiddos. So a median 4 occupant house would be husband, wife, and 2 children living in a place with a master bedroom, kids room, a combined kitchen/dining room, and a living room. Bathrooms, oddly enough, did not count as rooms. So in modern parlance it'd mostly be a 2/2 for up to 14% of one person's median income, and 0% in most cases as most people 'really' owned their homes. We definitely have lots more gizmos, but I feel like that's an exchange that relatively few people would make in hindsight.
  - bombcar 7mo ago
    I sometimes feel that the facts are all out there, but half the people pick one half the facts as causal and the other half pick the other half. Are home prices rising because people have fewer kids (and therefore more to spend on housing) or are people having fewer kids because house prices are rising (and therefore less to spend on kids)? I suspect that it's a complex mixture of all possibilities, and you can only really look at trends and your own life - the one thing you can have something resembling understanding and control.
    - tmnvix 7mo ago
      > Are home prices rising because people have fewer kids (and therefore more to spend on housing) or are people having fewer kids because house prices are rising (and therefore less to spend on kids)? Maybe a false dichotomy? My suspicion is that home prices rise because more credit becomes available (and not only homes prices but the price of other assets). If you think about it in broader terms this explains what happens to the fruits of our increased productivity - lenders extend more credit as productivity rises thereby claiming the benefit for themselves. The working person is still stuck with a 40 hour week because despite being more productive they have more debt to service.

wahern 7mo ago

And yet the homeownership rate in 1950 was 53% (an all-time high up to that point) compared to 65% today: https://www.huduser.gov/portal/sites/default/files/pdf/Housing-Situation-1951.pdf https://www.huduser.gov/portal/sites/default/files/pdf/Housi... Only 80% of units had private indoor toilets or showers. It is notable that the median monthly rent was $35/month on a median income of $3000, so ~15% of income spent on rental housing. But it's interesting reading that report because a significant focus was on the overcrowding "problem". Housing was categorized by number of rooms, not number of bedrooms. The median number of rooms was 4, and the median number of occupants >4 per unit (or more than 1 person per room). I don't think it's a stretch to say that the amount of space and facilities you get for your money today is roughly equivalent. Yes, greater percentage of your income goes to housing, and yet we have far more creature comforts today then back in 1950--multiple TVs, cellphones, appliances, and endless amounts of other junk. We can buy many more goods (durable and non-durable) for a much lower percentage of our income. There's no simple story here.

somenameforme 7mo ago
What an interesting paper you found! Home ownership stats in contemporary times are quite misleading because of debt. Most home owners now are still paying rent in the form of a mortgage to a bank. In the 50s most home owners genuinely owned their homes 'free and clear'. The exact rate was 56% in the 1951 per your paper (which was a local low), and now it's at 40% which is a local high. And the contemporary demographics are all messed up - it's largely driven by older to elderly individuals in non-urban low-income states. As for number of occupants, the 50s had a sustainable fertility rate. That means, on average, every woman was having at least 2 kiddos. So a median 4 occupant house would be husband, wife, and 2 children living in a place with a master bedroom, kids room, a combined kitchen/dining room, and a living room. Bathrooms, oddly enough, did not count as rooms. So in modern parlance it'd mostly be a 2/2 for up to 14% of one person's median income, and 0% in most cases as most people 'really' owned their homes. We definitely have lots more gizmos, but I feel like that's an exchange that relatively few people would make in hindsight.
- bombcar 7mo ago
  I sometimes feel that the facts are all out there, but half the people pick one half the facts as causal and the other half pick the other half. Are home prices rising because people have fewer kids (and therefore more to spend on housing) or are people having fewer kids because house prices are rising (and therefore less to spend on kids)? I suspect that it's a complex mixture of all possibilities, and you can only really look at trends and your own life - the one thing you can have something resembling understanding and control.
  - tmnvix 7mo ago
    > Are home prices rising because people have fewer kids (and therefore more to spend on housing) or are people having fewer kids because house prices are rising (and therefore less to spend on kids)? Maybe a false dichotomy? My suspicion is that home prices rise because more credit becomes available (and not only homes prices but the price of other assets). If you think about it in broader terms this explains what happens to the fruits of our increased productivity - lenders extend more credit as productivity rises thereby claiming the benefit for themselves. The working person is still stuck with a 40 hour week because despite being more productive they have more debt to service.