It's now going for over $225k in a flyover state. He bought the place in the 80's for $72k on a $40k/yr salary - and the job he held to pay for it pays $44k/yr today. The exact same house is out of each for the exact same job today.
Housing has skyrocketed by all available metrics. The one that matters most of course is % of after tax income spent, and it's never been higher.
That means the house's value increased by about 30% over the past 33 years. I don't know the specifics of the situation, but some of that 30% is probably from increased economic development in the area it's in. Some may also be from improvements made to the house.
Regardless, phrasing it as "house used to cost $72K and now costs three times that" is inaccurate and misleading.
The other part of the problem is that the income for the same job has only increased by $4,000/year in the past thirty years, while it should have increased by about $50,000 over the same time to keep pace with inflation.
That's a much more serious problem than increased housing costs.
Disclaimer: I am not an economist so my understanding of the situation might be horribly flawed. Please correct me if that's the case.
I remember being a kid in the 80’s and getting 5.4% on a savings account!
The rust belt was booming then. There were more options. Now for the best opportunity you have to take a risk and live in the major cities with astronomical housing prices or long commutes.
> The other thing people were more willing to do in the 1940s was move to where they could afford to live.
Where can you move today that offers affordable living and a good, steady job? Lets say you were on the expensive east coast and wanted a cheaper, more affordable place to live, with work. You'd consider Pittsburgh or Detroit, maybe. Both tick the boxes - affordable, plenty of good, union jobs, enough to own a home and build a family.
Does Pittsburgh fit that bill today? The answer is unequivocally no. Sure, housing prices are down compared nationally - but the last 10 years have seen a boon in housing prices here. Flipping is happening like crazy. Rents have increased. But wages have not - because cost of living adjustments punish employees in places like Pittsburgh.
I assume you're coming from a tech perspective. It's easy for that to skew your PoV. Think of it as the lay person. It's a much riskier prospect today.
Pittsburgh is one of the worst cities in the country for retaining recent college graduates (Pitt, CMU, Duquesne, etc). Why? The job market simply isn't large enough.
I am coming from a tech perspective, but most of my friends and family are not. Their stories aren't wholly dissimilar - those of us who were in tech could afford homes faster than those who are not, but most everyone who is aiming to achieve that goal isn't having a problem doing so around here.
I dunno, it feels like responding to that with a comparison of a household in the 40s to one today is fair.
Beyond that - in 1948, radio was something everyone hard, Television was a luxury, a home phone was pretty universal, owning a car less so, even electric coffee pots were seen less often - no smart phones, tablets or home computers - though many had a typewriter. People wrote letters frequently, as long distance phone calls were a luxury.
Now I can replace all of that with a single device and single monthly bill - a device I need to have professionally anyways to participate in most of the economy.
My slightly younger millenial friends probably have monthly recurring expenses not a whole lot more % of income wise than the 1940's. They pay for a cellular data package and have a relatively modern phone, and that's about it. A 52" flat-screen TV is less than the cost of a radio in the 1940's today - it's just not relevant.
There is a convincing argument however to me, that the poor of 2018, have a better existence and are better connected to the world that the poor of 1948.
Admittedly, they were pretty poor, but most people couldn't even imagine living in those conditions anymore. At the time it wasn't unusual.
Why do we live in houses? Partially to meet certain basic necessities:
- shelter from adverse temperature (too hot or too cold outside), adverse weather (rain, snow, wind): outside walls and roof
- a place to wash, a mirror to inspect yourself, a toilet: bathroom
- a place to sleep: bedroom
- a place to eat: a table and chairs
- a place for work: a desk and a chair
- privacy: a lock on the door to prevent theft, or violence
- a place for leisure or inviting guests: living room
Out of poverty leisure is likely to be sacrificed, but it may be possible to live a much cheaper life if these functionalities can be compactly (and probably inadequately) substituted. What features can be portably arranged into a suit? Imagine a kind of space suit -not intended for actual space- with smart temperature control say inspired on a rete mirabile [0] to exchange mass (say import oxygen and export carbon dioxide, while conserving heat), humidity etc, depending on outside and inside measurements. This would probably necessitate a cheap helmet to keep the conditioned air inside (during adverse outside conditionns). It should be weather proof too. It should require little clean-up, or alternatively the suit should be lightweight enough so an it can be carried or washed while the extra is worn. A big problem for homeless people is theft and violence. So the suit should have intelligent motion detectors, and possibly communicate to other high-tech low-lifes to share news of danger, in order to allow sleep. Sanitation will probably be commercialized cubicles of bathrooms. Similarily workspace will probably be measured in desks (with a selectable height limit for your stuff) and archives, and these will be stored as trays by an automated system, such that you can enter one of the vacant rooms, login, select one of your desks or boxes, after which your tray/desk is loaded in front of you, exactly as you left the contents on the desk the previous time. You rent the room at some price per hour, but also each desk or volume of boxes at their respective rates for storage.
[0] Rete mirabile: https://en.wikipedia.org/wiki/Rete_mirabile
But I believe we will fix the housing issue in a more fundamentalist way.
And that's where all your money is going, to buy that sixteenth of an acre. The house itself is only a very small part of the cost in many of the metro areas beset by housing crisis.