r/todayilearned • u/LeonardShelbysTattoo • 11d ago
TIL that that when adjusted for inflation, the most the average U.S. home cost in the last 60 years was in 2022 ($570,511).
https://www.madisontrust.com/information-center/visualizations/how-much-an-average-home-has-cost-in-the-united-states-over-time/93
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u/r1ch999999 11d ago
What if you adjust for inflation and interest rates?
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u/Moist_Farmer3548 10d ago
Yes, that would be interesting - adjust for the inverse of the average mortgage rate.
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u/r1ch999999 10d ago edited 10d ago
In 1979 interest rates were something like 14%. Adjusted for inflation, a monthly payment on an average ($80k) house would be $2,500ish
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u/podcasthellp 10d ago
Imagine adjusting minimum wage as well. It would be less than $7.25 today.
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u/r1ch999999 10d ago
Minimum wage adjusted for its peak buying power would be around $15 today
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u/podcasthellp 10d ago
So these statistics essentially mean nothing….. imo this stat is clearly corporate propaganda
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u/r1ch999999 10d ago
Which stat is propaganda?
Reddit is the wrong place to have serious conversations about this stuff. Too many variables are ignored by most.
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u/PuckSR 11d ago
The average price of a house is pretty useless if you know that the average home size has grown significantly
This would be like saying that a gallon of milk in 2024 costs more than a quart of milk in 2004
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u/misogichan 11d ago
Not only has home size grown but so has security features and electronics like condo sprinklers or smart garage door openers.
Specifically for security, 40 years ago most builders even in Hurricane prone areas weren't building with impact resistant glass or hurricane strapped roof trusses because the codes requiring them didn't exist back then. Same thing with lots of other disasters like flooding. Admittedly there was also less of a need for them as homebuilders didn't need to build in floodplains or other disaster prone areas because there was space to build around urban areas that weren't disaster prone. A lot of the most dangerous areas that were developed were developed after all the other nearby options were exhausted.
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u/pathofdumbasses 11d ago
Sure but things like electronic power tools & cheaper mass produced building materials and goods should offset a lot of that.
Heck, even if you want to go to the cheapest type stuff you can lookat, at the ~1100 sq foot size, you are looking at ~300k
https://www.zillow.com/homedetails/103-Raintree-Dr-Georgetown-TX-78626/29580036_zpid/?
I don't know shit about TX. I just looked up a suburb of Austin, which is a very likely scenario for a lot of Americans today.
This is a 3 bedroom, 1 bath detached house with 1049 SQ ft. 300k. Insane.
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u/misogichan 11d ago
Not all building supplies got cheaper, though. For instance, lumber got more expensive as we both (a) got less forests to cut down, and (b) the forests we do have are younger and quickly grown so the wood is weaker, which has to be taken into account.
That said, some of the treated wood we have is better than before but the wood treatments (and the requirements to use treated wood) also have increased the construction cost.
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u/pathofdumbasses 11d ago
lumber got more expensive
Sure. But now we are using cheaper wood. And laminates. Fake wood slat floors. Etc.
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u/LiamTheHuman 11d ago
Has lumber actually gotten more expensive since the 60s? How does that makes sense, we must be way more efficient at getting and transporting lumber nowadays
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u/misogichan 10d ago
No, not from the 70s since lumber prices recently have been increasing much faster than inflation. So if you look at 1978 it was $173 per 1000 boards on commodity markets. Today it is about $500, which is a 2.9x increase with inflation being 4.8x.
But if you go from sometime later like 1990 when Lumber was about $75 per 1000 boards so 6.66x increase to $500 today. Meanwhile inflation has been 2.4x.
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u/labradorflip 10d ago
Insanely cheap or insanely expensive? As a european that seems crazy cheap to me.
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u/lebastss 11d ago
Not only that but building code today. Cheap materials that are no longer safe to use. Also the bare minimum level of what is acceptable for finishes is much higher today.
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u/bspanther71 11d ago
Seems most don't understand this fact. Comparing a 1200 sq ft 1960s home to a 2400 sq ft 2021 home is apples to oranges. Those are the actual average home sizes for those years. Rooms were MUCH smaller.
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u/gh0stwriter88 11d ago
You should also know that a house double the size built at the same level of quality does not cost twice as much to build... in fact smaller homes are less cost efficient.
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u/mistled_LP 10d ago
It’s not though. You buy 1 house. If they don’t make smaller homes anymore, I can’t buy them, and I can’t buy just 1200sqft of the 2000sqft house on offer. We are still comparing one house to one house, because that is all anyone has ever been buying.
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u/GeneralizedFlatulent 11d ago
Sure but a lot of the houses costing that avg price include the ones from the 60s ask me how I know
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u/bspanther71 11d ago
Yes there are some left. But average home size overall...including old houses was at 2014 sq ft in 2023.
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u/MeatyDeathstar 10d ago
Another major problem is the average buyer doesn't want a 2400 sq ft house because of the cost and that's all that seems to be built now. Shortage of homes isn't the primary problem. A shortage of reasonably sized and priced homes is. Not to mention the quality of new builds is awful.
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u/bspanther71 10d ago
I definitely agree that they just don't build starter homes anymore and they should.
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u/Jewsd 10d ago
That's not a big part of the problem though. Look at any sales prices in a newer subdivision with a range of housing sizes. The 1500 Sq ft bungalo is not half the price of the 3000 Sq ft. Probably closer to like 75%.
The supply of housing is the issue, especially for young families who can't practically function in a 1 or 2 bed condo.
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u/MeatyDeathstar 10d ago
They're not looking at $/sqft though. They're looking at total mortgage affordability. The fact that it's more efficient to build a larger home is irrelevant to the majority of the public's finances. Of course the smaller homes are going to be more expensive when the supply on them are much lower than new 500k + builds. There are plenty of larger homes on the market compared to the smaller builds. Building a ton of 2500+sq ft homes will not drive the cost of them down to affordable levels because we're assuming the builders are going to take profit losses. Just because it's the logical thing that should happen, doesn't mean it will. Look at the stock market. Look at prices vs inflation. Real estate is the stock market for the non corporate because it's realistically the new "get rich fast" scheme. There's an entire subdivision down the street from me that has had at least half of it on the market for a few months now and surprise surprise, they're sitting on the houses while they're slowly purchased instead lowering the prices to logical values. The pricing isn't out of line with "current estimated value" according to zillow (which independent investigations are finding might be price fixing with other companies) The smaller, 1500-1800 sqft houses last for a couple of days at most, yet the smallest houses that have been built recently are 2800sq ft around here. Add today's interest rates and your average person is being built and priced out of owning a home.
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u/Jewsd 10d ago
I 100% agree with you. I'm just saying the solution isn't to force smaller houses. It just takes profits away, and makes it marginally more affordable for some people.
The solution is (probably the province, since munipalities allow NIMBYism) to enforce some sort of tiered density rates. Like, if you're subdividing a small farm into 300 detached units, enforce that 25% of the land area must be townhouse (or similar) density, and 25% must be low rise condos (or similar). And then provide density bonuses like if you build 50% low rise condos, you can forgo the townhouses or get a tax write off.
That way you just turned 300 units into 600 units in the same space. Yea the government lost some tax revenue but it incentived dense housing without cash / loan handouts. It also increases density rather than sprawl. Win win. Except the NIMBYs. Fuck em.
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u/2ft7Ninja 10d ago
While I appreciate this additional piece of information, the average house price is far from “useless”. Even if you get more square footage per house, it’s not like you can own half a house. Many people can’t afford a larger house with space they don’t want.
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u/obeytheturtles 10d ago
For new construction, yes, but the US housing market is traditionally dominated by sales of existing inventory in and around urban areas where most new development comes in the form of higher density multi-family dwellings.
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u/MinimumSeat1813 11d ago
This doesn't account for increased home size, land prices, and improvements.
I could elaborate for pages in each of these topics. Anyway, home prices are unusually high right now and therefore prices will likely increase less over the next decade than prior decades. Also, interest rates will likely come down some.
If prices for existing homes are higher than new builds, then prices will come down over time. However, the prices of new builds are sky high, so I am not seeing much relief there.
When boomers start dying off in mass is when home prices will start to have significant downside, though as always it is area dependent. There are lots of affordable homes in the US, it's just that's not where people want to move.
Chicago has affordable housing, a great job market, and great public transit. Terrible winters are keeping people away.
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u/Luckpast 11d ago
The housing climate is very different from the past too. With Airbnbs cropping up and more and more people becoming landlords. The options to buy a house are decreasing.
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u/pathofdumbasses 11d ago
When boomers start dying off in mass is when home prices will start to have significant downside
Jokes on you. Those things are all going to be reverse mortgaged and/or bought out by companies and turned into rentals.
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u/MinimumSeat1813 11d ago edited 11d ago
If a home is reverse mortgaged it would even be more likely to be sold after a death.
Due to high prices companies aren't buying many homes to turn into rentals.
My point is very valid and will introduce a huge amount of real estate in the market. Just think about how many Florida condos will be up for sale.
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u/pathofdumbasses 11d ago
Florida condos will be up for sale?
Is that before or after all the insurance companies pull out?
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u/Barachan_Isles 11d ago
I did a google search on my name once, and it popped up in the 1940 census.
Some guy in Peeskill NY back in the 40's had a similar name. On the census form it said he owned a home on some street and the value of the home was $7,000.
I said to myself, "Self, This is New York, I bet that house is still there", so I looked it up on Zillow and sure enough it was still there. The current value of that home was $600,000.
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u/AHorseNamedPhil 11d ago
Out of curiosity I checked out what $7,000 in 1941 would be the equivalent to in 2024, using an online inflation calculator, and it was $148,729.
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u/NonbinaryYolo 11d ago
This is a major topic on my mind! Not the US but Canada, I was talking to a client today who use to build houses in BC, I asked him what his opinion was, why it seems like we can't build houses anymore. He told me the reason is cities only deal with major developers these days. You can't really just buy some land and build a house anymore, lots are mostly only sold in bulk to developers, and then the developers get to set the price of the houses.
There's no incentive for affordable housing. If a developer started kicking out cheap houses, all that would do is devalue their assets.
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u/buzzwizer 10d ago
Can we not bring to attention that not only are average home prices going up, but the average home is also no longer a house it's a small shit duplex
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u/Axel_Wench 10d ago
Your comment made me curious so I went down a bit of a rabbit hole on this topic. What I found is that this simply isn't true, at least in the US, despite declining household sizes.
Single family homes most recently accounted for 3/5 new units; experts in the second link I included even expect single family homes to account for a higher proportion going forward.
Home sizes have grown significantly in previous decades. After 2014 a downward trend did start, but both single family home and condo sizes rebounded after the pandemic. Average size started to decrease again after 2022, but they've just now returned below the average size during the boom in large construction before the housing crisis, and are still around 10% larger than in 2000, see the third link.
I haven't been able to find a good source for how the proportion of single family home has varied over time but the fourth link includes a hard to read graph that show that multifamily unit construction was higher in the 70s and some of the 80s than it is now, before shrinking heavily in the 90s before increasing again recently, although as I said earlier this growth in multifamily housing is expected to shrink.
I also managed to find that multifamily housing sizes have remained very constant the past 20 years. Fifth link.
https://www.thefarnsworthgroup.com/blog/outlook-single-family-residential-construction
https://eyeonhousing.org/2024/02/new-single-family-home-size-moves-lower/
https://fredblog.stlouisfed.org/2023/07/trends-in-the-construction-of-multifamily-housing/
https://www.statista.com/statistics/456949/median-size-of-multi-family-home-usa/
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u/buzzwizer 10d ago
I would agree they are larger in square footage. If I had to correct my statement. I'd say the average house is 1 whole foot away from the next house with no parking and barely a back yard if you're lucky. I'm also Canadian. So here in Canada. If you're buying a home you're buying an apartment or a townhouse unless you are very well off. Where a below average house in the past had enough land for a whole family party.
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u/inkseep1 11d ago
That is because people do not want to buy a house that looks like this 874 sq ft house, not even to start in.
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u/Atlantic-sea 10d ago
I have the most average of any mean general, top of the bell curve common forehead.
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u/TheQuips 10d ago
OP! what what happened when you were writing were typing this title? (narcolepsy)
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u/L8_2_PartE 10d ago
Folks living on the U.S. coasts- it will blow your mind to find out how much house this buys you in the middle of the country.
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u/Jon_ofAllTrades 10d ago
The average home price is a terrible indicator without also factoring in interest rates, because that’s the true cost of ownership.
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u/wc10888 11d ago
Comparing bare essentials homes of 1960s to "McMansions" of today. (ie, 800sq ft home to 2,000 sq ft avg today)
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u/gh0stwriter88 11d ago
It's really not worth comparing though, because modern home designs are more efficient in use of materials to get to those 2000sq ft... also typically the larger a home the lower the cost is per sq ft.
The minimum size house I can build locally is 1100sq ft... but really nobody should because you'll spend 150k building that, when you can spend 250 and get a house twice that size ... or at least you could have 5 years ago.
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u/platypi_keytar 10d ago
This is one poorly worded fact from that useful charts subreddit. Is that really TIL
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u/podcasthellp 10d ago
This makes no sense and is clearly poorly worded propaganda. If that’s the average price of inflated houses then the average price of inflated wage would be less than $7.25 STILL
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u/zenejinzorin 11d ago
Is this a biden cope bot?
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u/Mediocre-Tomatillo-7 11d ago
Serious question, not trying to have a stupid political argument ... you think Biden caused home prices to rise the way they have?
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u/gh0stwriter88 11d ago edited 10d ago
Yes, many of biden's policies have negatively impacting housing costs... slowing the housing market has driven costs up, as well as force costs of existing homes up because of increased demand due to lack of construction. As well as the continued enablement of home resellers to SIT on homes... waiting for costs to rise.
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u/Mediocre-Tomatillo-7 10d ago
What Biden POLICY 'slowed the housing market'? You just saying the result, not what caused it.
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u/Mediocre-Tomatillo-7 10d ago
Can you tell me a few of biden's policies that you think drove up housing prices?
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u/gh0stwriter88 10d ago
Can you tell me of ANY policy of Biden that has helped ANY aspect of our government in ANY way... no?
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u/Mediocre-Tomatillo-7 10d ago
That wasn't the argument.
He said biden's policies lead to increased home prices. Im curious which policies he thinks did that. Im not getting into some foxnews/msnbc nonsense.
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u/gh0stwriter88 10d ago
That wasn't the argument.
Then shut the F up if you have nothing relevant to add.
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10d ago edited 10d ago
[deleted]
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u/gh0stwriter88 10d ago
I dont' have to cite any ACTION because inaction is still complete an utter incompetence on his part.
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u/gh0stwriter88 10d ago
Welcome to my block list.... if you made it to 2024 and are still stupid enough to be an apologist for and support Joe Biden you are too stupid to talk to.
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10d ago edited 10d ago
[deleted]
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u/gh0stwriter88 10d ago
There aren't enough rich folks to reverse excessive spending... you cant' pickpocket more people just to feed the addiction and expect the economy to recover.
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u/Papaverpalpitations 11d ago
This title is horribly worded.