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

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.

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.

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.

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

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.

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.

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

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

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.

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

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.

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.

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

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.

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.

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.

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.

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?

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.

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

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.

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.

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.

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.

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-...

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.

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

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.

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.

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.

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.

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.

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

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.

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

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

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.

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.

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.

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

> 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

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.

> 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".

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.

It has an apple on it

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.

> 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).

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?

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.

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.

> 1. bigger houses

also 300 sqft condos.

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

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.

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

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.

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

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