- cross-posted to:
- latestagecapitalism@lemmy.world
- cross-posted to:
- latestagecapitalism@lemmy.world
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Interesting claim. Let’s look into it.
Average home price in 1970: $25k I found a few different figures on this one, and averaged them out.
$25k 1970 dollars in 2026 per CPI: $220,251 https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=25000&year1=197001&year2=202604
not necessary, but gives context: Average (not median) home price today: $502k https://fred.stlouisfed.org/series/MSPUS
Median home price today: $410k https://fred.stlouisfed.org/series/MSPUS
“The median money income of all families in 1970 was about $9,870” https://www.census.gov/library/publications/1971/demo/p60-80.html
Median family income in 2024 (most recent year reported): $105,800 [note: does anyone believe this? FRED is claiming median family income went up 45% in the past decade and I find that EXTRAORDINARILY suspect. Few people get COLA over 3% and many getting fuckall.] https://fred.stlouisfed.org/series/MEFAINUSA646N
roughly a 10.7X increase
My best guess is that Mr. Brooks, using slightly different numbers (sources vary, exact years, etc…), to arrive at: 1970 Home Price + Flat Income Gains = $138,000. This is not great methodology, as growth is looked at in percentages for a reason. To illustrate, suppose instead of a house we were looking at candy bars. Let’s say in 1970 a candy bar was a dime and today it’s $2. Grafting raw wage gains onto candy bars, we’re saving over $80k on each candy bar!!! Oh wait, that’s silly. Let’s stick with percentages.
Using the official wage numbers, we arrive at “the average home today would be $267,500”. This is more accurate yet still a massive departure from where we are today.
So… what actually broke?
There are several explanations for this divergence.
The Good: Houses today are bigger and have better construction standards. Please, before you start typing a survivorship bias based claim about your house from 1905 that’s still in great shape today, read up on survivorship bias. Yes, there are modern builders who do shoddy work (we’ve all seen the Youtube videos), but overall a house built to code in 2026 is significantly more advanced. A fair amount of the cost increase can be captured here.
The Bad: Rent seeking. Figurative and literally. Somehow someone was like “hey, I’m going to get rich by making a basic necessity worse” and nobody beat them within an inch of their life to discourage others. Rookie mistake by our society.
The Ugly: Official numbers are suspect at best. This was true before 2025 and whoa boy is it true now. Inflation is chronically under-reported BY DESIGN. That means actual inflation is driving up the cost of houses and cans of bean and things, while reported inflation is being used to determine your pay raise (that is, if you even get one). This divergence that started in the 90s is hitting critical mass here in the roaring 20s and we’re probably fucked as I haven’t heard anyone in a position of power even recognize this problem, let alone suggest how to fix it.
Renting out a single family home for longer than 3 months at a time without living in it should be an actual crime, or at least extremely (50-80%) tax heavy (the taxes then going towards house subsidies). Owning an unoccupied home should be taxed even worse. A corporation can count as a single person, so a property management company can own a single house OR as many apartment complexes as they want before tax punishment.
The modern version of Airbnb as a business model (people owning 5+ houses to rent for daily prices often in excess of hotel prices with none of the hotel benefits + “cleaning fees”) should have millionaires hanging from trees.
I foolishly believe the above two policies alone would cut home prices by at least half.
People will dance a thousand dances around the fact that low income housing should be built, owned, and operated by the municipality.
The privately owned house building industry has failed its entire purpose and deserves to lose their place at the table. Those responsible for this problem must not be involved in the solution. Make the army build it. Way better use of our armed forces then whatever the fuck is going on these days. Or a WPA like program.
Stop fucking begging these douchebags to fix a problem they caused. A problem they profit off of.
Agreed. Another, less violent but better for local finances, path forward could be sky high property taxes alongside homestead exemptions. That and greatly simplifying the opaque web of first time homebuyer incentives and options. Passing such a set of reforms would boost tax revenues for a few years, drive up rents while driving down the cost of homes, and then have a tail end boost to home owner industries.
The 1974 Tax Code re-write, that baked Trickle Down Economics into our tax code, created the Oligarch class, giving them the disposable income to manipulate political policy to their further benefit.
The Rand Corp issued a report on income inequality, and the situation is far worse than most people think.
The median salary of $43K in 1975 has increased to only $50K today, while they would have been making $92K if the tax code hadn’t been steadily re-written to enrich the wealthy at the cost of the middle class and poor.
In that same time period, the mean income for the top 1% went from $289K to $1.384 million, while they would have been making $630K under the old tax codes.
Thats a 17.4% increase in the lower median, and an increase of 321.6% in the 1% median. Clearly there has been an upwards distribution of wealth at the expense of the middle class since the tax codes started to be re-written in 1974 to favor the top economic tier.
Read more about it :
New York Mag: http://nymag.com/intelligencer/amp/2020/09/rand-study-how-high-is-inequality-us.html
Fast Money: https://www.fastcompany.com/90550015/we-were-shocked-rand-study-uncovers-massive-income-shift-to-the-top-1
Yes our earning power is trash compared to the 70s, and I think there are more reasons for that than what you stated. But your answer didn’t really address why homes specifically have dramatically outpaced the general rate of inflation.
Probably because land is one of the best non-fungible assets around. You buy land and you have something whose upper limit on price is only limited by what someone else wants to build on it. And premium space around existing economic centers (cities) doesn’t just spring up.
Privatization and consolidation of houses as investments, instead of homes.
The 1974 Tax Code re-write, that baked Trickle Down Economics into our tax code, created the Oligarch class
Read a history book. The class war spans human history.
Why use nearly decade old data though?
That article is 6 years old, and uses data through 2018.
Median household income today is $83k.
And that’s adjusted for ”productivity”. Not exactly a concrete metric.
What broke is they allowed housing to be a commodity allowing speculators to bid on.
Yep. With the repeal of Glass-Steagal, the commercial banks used for things like mortgages, checking accounts, and car loans were able to merge with investment banks. The Act was out into place in 1933 because having retail banks mixed with investment banks was why Black Tuesday lead to the Great Depression.
That allowed houses and mortgages to be combined into investment packages for the speculators, and lead to prices skyrocketing.
It’s what caused the 2008 crash, and in all the aftermath of that, nothing was actually done to fix the issue. The fix was simple - re-divorce them and reinstate Glass Steagall.
Nothing broke.
This is capitalism working as intended.
Capitalism
Homes as equity.
Once they were considered investments, then they were subject to the “Line Must Go Up” tenet of capitalism.
Capitalism is working as intended.
I think nearly all western nations have similar problems, so it’s not solely a US thing? I see people talking about affordability in Toronto, London, and New Zealand at least. I recently saw a video of a Chinese software engineer living in a makeshift shack on the roof of a building and still needing to do food delivery on a hacked ebike to make ends meet, so it may not be only a western thing either.
I would guess it’s a multitude of issues causing it. Wealth disparity and the ballooned financial sector is probably the largest contributor. Resources (lumber, fossil fuels, etc) getting more expensive to extract and transport probably plays some role. Stricter building and sanitation codes, zoning, and communities fighting low income housing being built probably does too.
this happened and we never recovered: https://en.wikipedia.org/wiki/Subprime_mortgage_crisis
So your claim is that things were perfect before 2008?
lol I never said that. Though before the economic collapse happened in 2008, the cost of living was low enough to where if you made 50k annually it actually sustained some part of your life with a savings. Now that’s 20k above poverty and you can’t build a savings with 50k$, now 75k$ minimum is needed to build savings and live comfortably with a realistic figure being around 120k$, depending on where you are in the US.
things were perfect before 2008?
dollar menu still existed and mc flurries were still mixed so it wasn’t bad lol
Capitalism has always been broken.
But an underlying problem is the pseudo-scientific ideology of “economics”. It’s what fuels these kind of dumb questions. Nothing broke. The denial of human needs has always been a feature, not a bug.
Spoken like somebody who has never cracked a book on the subject.
Honestly they aren’t entirely wrong, there’s basically two types of economics financialization which is basically all bullshit and proper economic systems which is things like production, logistics, and services. You could probably burn the entire financialized side of the system down and it’d probably help the overall real economy in the long term hell it’d probably help in the short term if not the immediate.
Bingo. You got it.
Some people think religion is real too, but it’s only real because people believe in it.
Nothing’s broken, least of all the laws of physics. Detached, single family homes are low density housing. The land that makes up any given metro area is basically a two dimensional plane. That plane is a finite amount of space that can only be filled with so many buildings. Detached homes are almost always limited to just a few stories at the most, and they can’t be stacked on top of each other, so vertical expansion is essentially non-existent. The only way to build more detached homes is to spread out horizontally along the two dimensional plane. But the further you go out horizontally from the metro center, the further you are from the jobs and amenities that are associated with an urban core. The detached houses that are nearest to that center are in the highest demand, so their prices go up the most. You can continue to just build out horizontally, but after a while you simply run out of land. Or, the houses get so far from where the jobs and amenities are that it’s not viable.
There are areas in the US where you can buy a home for $138,000, but most people probably don’t want to live there, which is why the homes only cost $138,000. Areas in greater demand will have higher home prices. In the areas that are in higher demand, again, the only option is horizontal sprawl away from the metro center, if you’re building only detached single family homes.
This is also a function of transit efficiency. It’s not the distance to a metro center that is the problem, it’s the time to get to that metro center. Our commuter rail network is woefully slow. Our highways have design issues that create choke points that cause traffic jams. If living 20 miles from the urban centers was only 20 minutes away, then it wouldn’t be an issue. In fact, it might be desirable to go home to a quiet place, but have more action a short commute away.
Not even going to mention the poor design of suburban areas that lack a proper downtown of their own.
This is also a function of transit efficiency. It’s not the distance to a metro center that is the problem, it’s the time to get to that metro center.
Yeah, but the further a suburban neighborhood is from the metro center, the more time it will take to get there, necessarily. Maximally efficient transportation would minimize the travel time but not eliminate it. Even with great transportation options, the further the sprawl, the longer the commute.
Not even going to mention the poor design of suburban areas that lack a proper downtown of their own.
But if a suburban area grows enough to need urban infrastructure it kinda stops being suburban. Which is fine, there’s nothing wrong with increasing the number of urban areas. I don’t think we should have only a few Tokyo style mega cities. But I also don’t think higher density is necessarily a bad thing. I get that not everyone wants to live in a relatively high density urban area, but I’m also sure that we can’t just keep sprawling out forever.
Faster express trains with better access and less stops. In combination with improved roadways
They should start building china style huge apartment buildings.
Stupid that we aren’t yet doing itIdk about China’s style, but we do have high rises. And Washington state is on a state level encouraging building higher density in urban areas. This has led to increased density zoning, and is expected to lead to, in the not too distant future, an area that was once single family housing to be rezoned for high rises.
so people who get reimbursed (The Fifth Amendment of the United States Constitution mandates that if the government takes private property for public use, the government must provide “just compensation.” In Kohl v. United States, 91 U.S. 367 (1875), the Supreme Court held that the government may seize property through the use of eminent domain, as long as it appropriates just compensation to the owner of the property. Source: https://www.law.cornell.edu/wex/eminent_domain) will just move to where their careers provide stability as well as being able to afford a single family home.
If you can afford a home and all that comes with owning one, do it up. Nothing wrong with being a home owner. I will never shit on success because you have to be successful in life to purchase a home. I’ll shit on the ultra rich who are gonna profit on those apartments and make it so that they’re gonna go to shit or use materials that are just good enough and a structural falure happening.
The government isn’t tearing houses down, simply permitting larger multi family dwellings in neighborhoods specifically targeted for growth. Those areas in Seattle are usually along the light rail line, and elsewhere are closer to city centers.
Most who sell will move to more suburban areas elsewhere, often in town, others will move to something like a townhouse, but regardless there will be more residences available in higher desirability areas
They should start building china style huge apartment buildings.
fuck you. Like living in a cramped apartment where you can hardly move around is more ideal than making it so that people can actually retire and actually make college loans affordable so people can actually afford to further their lives. No one should aspire to live in a Chinese style apartment. We should all want to make 75$ and up.
fuck you
Fuck you too then. Go build your stupid wood house yourself then. And no 75k a year is not gonna make that house affordable anyways
75k$ and up
120k$/might which is bullshit easy to reach depending on what you do and where you are and how good you are at your job.
Lol, no it isn’t. I make that now, can’t afford a house anywhere near a city where a job like that is available.
Single Family Homes are the epitome of wasteful toxic individualism and your yearning for one marks you as a selfish, toxic person.
And woah, displaced anger much? Just cause you can’t find a house where you are making sick money doesn’t mean you should hate on me, you should move to where your profession is more valuable.
If yearning to own a home and having indiusalism, marks me as toxic than lord give me super powers to rise up above you all.
Yep, selfish and toxic. You probably think it’s better to live in a car dependent suburb where “those people” can’t bother you, don’t you?
You should move.
Lol, no. I’m not interested in living in cousin-humper country just so I can have a shitty patch of grass to have to mow.
You should learn how to coexist with other humans in a shared space instead of thinking you and maybe your immediate family are so fucking special you deserve to take up the space where a dozen families could live in actually dense housing.
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No one should aspire to live in a Chinese style apartment.
Do you seriously think minimum wage workers could afford that if that was the US?
I think:
Lol fuck yourself clown, tiny apartments are fine
You can’t just keep building out horizontally; it reduces intensity without reducing costs, eventually becoming unsustainable.
Nothing broke - the capitalist system is working exactly as designed. We’re just not the tiny sliver of the populace that benefits from it.
Houses should be investments… in the same sense that a good, durable pair of shoes is an investment.
In a well designed system, the value of property should stay pretty flat over time, and the value of a structure built on that property should slowly go down over time as wear and tear sets in.
It’s ridiculous that it makes sense to buy more home than you need, and to hold onto a house longer than you need it because it’s one of the best and safest money-earning investments you can make. It’s especially annoying as someone in a position to make that investment gets to live inside their investment and enjoy it even as it appreciates in value.
Nothing else works that way. Can you imagine if you bought a classic car and drove it on the road as a daily driver and it went up in value? Or, if you bought a rare Magic the Gathering card, used it in your regular deck, and somehow it only became more valuable?
I’m mean, once you’re comfortable with a monthly payment why would you leave if the house suits your needs? Or payoff the asset and not have a payment. The being, you shouldn’t think of housing as something that depreciates over time, it’s not a car, you can fix it up, you can repair it to make it last 30 more years. Cars not always
I’m mean, once you’re comfortable with a monthly payment why would you leave if the house suits your needs?
You could say the same about a pair of shoes. If they’re in good shape, why not keep using them as long as they still suit your needs? If you get a good pair of leather shoes they can last decades needing only the occasional repair.
The difference is that you wouldn’t expect your shoes to go up in value every year even while you’re wearing them.
The reason why it matters is that someone with a good job can’t afford a house anymore, and shelter is right there at the bottom of Maslow’s Hierarchy of Needs.
I’m mean all the examples I’ve seen have very limited life spans, houses can last hundreds of years. It’s apples and oranges
That’s not the reason it’s apples and oranges.
We insisted on our homes being investments.
The only way for that to work is for houses to appreciate faster than inflation.
Otherwise, people would have to sell their houses for less than the inflation adjusted cost of what they put in.
Who is “we”? People listened to a bench of folks telling them how great it is that their home value will appreciate.
Most of them owning 1, that didn’t benefit them at all: you sell to buy another one that appreciated just the same, but they were happy to be told about their wealth magically increasing exponentially, punching way above their weight.
A few owned more than 1 and think of themselves genius and wise investors as they made quite some money.
The people who told these stories owned legions of them, or built more thanks to large capital availability, their wealth considerably increased, and they laughed at the commoners who were --once again-- fooled.
The younger generation now pay the price of this deception as they’ve been driven out of the market, and the same people who told stories yesterday suck them dry through ridiculous renting prices now. A lot of the young have 0 chance to ever own a home in these conditions, they’re giving up on home, on having children (multiple factors here), and with that, they also give the middle finger to hard work (when they can…) as they know too well they’ll never be rewarded for it. But no worry: inflation going faster than wages will force them into hard work just to barely survive, and eventually they’ll be enslaved by their debt.
And the same people who were fooled about the benefit of house value insane appreciation now scold them about “how hard they were working at their age”.
And the same people who told all of the stories look at them fighting among generations and laugh even more while drinking Champagne: their financial future looks brighter than ever!
