My mother’s 90th birthday is coming up and the eleven of us surviving kids are trying to come up ideas to make the day a special one, despite the social distancing and lockdowns. One of my sisters found an interesting card that showed what was going on in the US in 1930. There are several versions of these out there, and I wouldn’t mind having one sent to me on my own 90th birthday, if I manage to live that long.
Anyways, I was struck by the cost of a house compared to the average annual income. Have a look:
1920
$3,269; $5,000 (1.5 times)
A house, a modest one perhaps, was within reach of a middle-class worker in the ‘20s.
1930
$1,368; $7,145 (5.2 times)
This is at the start of The Great Depression, which is why the average salary has been slashed. Home prices, interestingly, are up. What’s going on there?
1940
$1,900; $6,500 (3.4 times)
Incomes are still low, but with the start of WWII, things will turn around.
1950
$3,300; $14,500 (4.4 times)
Houses are still expensive compared to income, but that may be a reflection of the demand for housing in the postwar baby-boom era.
1960
$5,600; $16,500 (2.9 times)
Income is rising faster than the price of houses.
1970
$8,734; $26,000 (3.0 times)
Both are rising at about the same level.
1980
$17,710; $76,400 (4.3 times)
From the Reagan era on, the price of houses compared to income starts to increase. I have read that this was the result of more married women entering the workplace, allowing couples to spend more on housing than they otherwise would have. Warren talks about this a lot.
1990
$29,943; $149,800 (5 times)
More of the same. Housing prices keep going up, up, up and were back at Depression Era levels, only the dual incomes have made people numb it.
2000
$40,343; $134,150 (3.3 times)
A return to sanity, or just a breather?
2010
$49,276; $272,517 (5.5 times)
As I suspected, house prices are bonkers again.