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.
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.
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.
Capitalism is working as intended.
Private businesses being allowed to buy up the market to artificially increase prices and scarcity. How else can you ensure real estate is a solid investment stream?
I think that’s part of it, but a larger part–having been a local reporter–is that government is run by people trying to keep property values high. In cities, that’s real estate developers and landlords. In suburbs, it’s typical homeowners.
Most construction brings down property values: increase supply=lower demmand=lower prices. There is therefore a strong political will to oppose ALL new construction.
The second concern is: how do we keep poor people out? Things like minimal lot sizes are designed to keep the prices up and limit the amount of new citizens.
The third concern is: how can we spend the most of our money on OUR children’s education. Many suburbs are spiritually and economically designed to do ONE thing: get kids into good colleges. That means high property valuations across the board so the most money can go to individual children’s education. There are very many suburbs people don’t even move to UNLESS they’re having children, and they move out when their kids leave school.
If you build an affordable apartment building in one of these suburbs and children start moving in, what happens? THe money from the rich houses is now diverted away from the rich children and towards the poor children, who are now paying much less in taxes. With schools less valuable, the property value of ALL the houses go down. “We’re all in this together,” the rich people realize, refering only to themselves, of course.
I do like the oligopoly narrative, but we have to face that we are facing MASSIVE FAILURES on a social and political levels. Everybody is scrapping for themselves and building walls and pulling up ladders and basically being as self-interested me-and-mine as possible, at the same time money is becoming the dominant form of political activity with which the masses of regular people can not compete.
Don’t worry, with birth rates dropping like a rock we’ll have plenty of extra houses in a couple generations, assuming humanity can make it that far.
The other factor with much of our development is that it requires an automobile, automobiles that are consistently getting more expensive to buy and repair. We’ve really fucked up.
No, we’ll destroy houses for freeways and data centers. There won’t be extra supply.
Or they’ll be bought up and turned into rentals. Student houses, Airbnb, etc.
Doubt it. There are plenty of empty houses right now.
Right now, the folks keeping an empty unit for speculation can afford to keep it empty.
When the less wealthy investors who need to pay a mortgage for their micro-estate empire of 3 units realize the demand is fading, they’ll be forced into lowering rental cost and maybe even selling.
China has seen a ginormous housing value appreciation over decades. The population is shrinking and the correction is happening. It is brutal.
Well no, they’ll sell to cut their losses. To people richer than them.
Yeah, that’s still possible. Corps should be banned from buying housing units. People who buy more than one should be taxed with an increasing rate for each additional unit.
Edit: typo
Fully agreed
They realized someday people pay off mortgages. No one’s ever paid so much in rent that they stopped having to pay.
And these cancerous parasites are doing it to everything possible, sucking the goodness and value out of the entire planet and life itself, because their greed is a terminal mental illness.
Unfortunately it isn’t terminal.
Good luck curing it before it kills us all :(
This is nonsense. Corporations own 10% of housing. There is pressure but it’s not a primary driver people need to stop parroting this
Homes are treated as speculation and investments. NIMBY ism abound when it comes to density. Expensive labor for new home construction.
These are the primary drivers.
Dude, so much of our area has turned into corporate rentals for when they host guests, or rent them out when not needed for business personnel.
The house close to my parents went for almost 40k over asking last year, so not even in a heated market.
👌👍
There’s probably another 10% owned by individual landlords with 3+ properties as well. It’s driving prices far more than you think. I’m my town something like 37% of single family homes are rental properties, if you don’t think that’s causing insane inflation of house prices in my area you’re crazy.
The biggest issue is lack of construction. We’re building fewer units now than we were in the 1960s, despite having double the population today.
There’s been way more new houses built in the greater area in the last 10 years than were ever built when I was growing up.
Adjusted for inflation I probably make about 60% more than my stepdad did when they bought a house in 1997. That house is now worth almost 5x what the bought it for. And the mortgage for the house as a first time homebuyer is probably close to 8-10x what it was for them.
The house next to my friends probably needs to be a complete rebuild and it’s likely going to sell for 800k. It is a good location but it’s not particularly big and is unlivable best case you could take it down to the studs but I didn’t even think that is actually enough to fix it.
Must of the rentals here are owned by a few family owned property management companies.
Really basic 100m2 house is 450.000€ here. No basement no lot. Construction is stupid expensive since ukraine war started. Add to this, everytime there’s a sale several people demand processing fees in % of the value including state… This drives prices only up.
Doesnt help that china built their economy on real estate in the last decades, consuming lots of the raw materials. Also ever stricter regulations like insulation, heating, electricity is a point.
Companies buying homes shouldnt exist but we are at 650-750k for a 4 person home with barely any lot without that already.
Homes as equity.
Once they were considered investments, then they were subject to the “Line Must Go Up” tenet of capitalism.
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.
Here’s the history of US inflation in a nutshell.*
Lyndon Johnson wanted to have a Great Society and have a quick win in Vietnam. He thought that a big buildup could give the US a knockout blow, but it turned into an expensive quagmire. The US was dropping a dozen Hiroshimas worth of bombs on the jungle every week. This meant that US steel mills were working 24/7 and not getting updated. LBJ is printing money to pay for this, because he doesn’t want to raise taxes.
Nixon comes in in 1969, promising to end the war. Instead he triples down on the policy of printing money and overworking the factories. Then the Arab Oil Boycott hits. Prices of everything jumps. Many small manufacturing businesses either go broke or relocate to non-Union states. All those fancy Manhattan lofts you see today started as factory buildings.
And while the US steel mills were running day and night, Japan and Germany couldn’t get American steel, so they started building their own mills. Mills that needed a lot less power than the aging US mills. Suddenly Americans were willing to buy a tiny Japanese car instead of a Detroit model that got 6 mile to a gallon.
Jimmy Carter gets one term as President before the Iran Hostage Crisis ruins him. Carter hires Paul Volker to run the Fed and save the economy. Volker’s plan works, but it’s Ronald Reagan who gets the credit. Ronnie kept Volker in place.
Reagan has his own version of Nixon’s print and spend policy. Tax cuts for the rich and bank deregulation create an artificial boom in the 1980s that lead to a stock market ‘correction’ in 1987.
When Nixon came into office, ‘middle class’ was one Union job paying for a family of four and $1 million was considered a vast fortune that could buy a dozen houses.
By the time Bush Sr. was done, ‘middle class’ was two incomes to support the household, and $1 million was what a rich guy paid for a party.
*this is a very brief description, leaving out many details.
for a brief description this is very impressive.
Thank you.
Eh… I think this puts a bit more emphasis on the economic impact of US Steel to the overall economic outlook during the post war period.
The steel industry was more important to the US economy from the later 1800s to the post war boom, but a lot of the growth in the US market started to diversify way before the Vietnam war. Automation and the popularization of mini mills hit the US steel industry harder than anything.
The same thing goes for the accusation of “printing money” being the real cause of inflation. In reality the rapid rise in inflation was one of the reasons Nixon moved to fiat currency. The Brenton Woods system was leading to American gold reserves being drained by other nations right when Germany and Japan began to recover during the post war period.
Tax cuts for the rich and bank deregulation create an artificial boom in the 1980s that lead to a stock market ‘correction’ in 1987.
Tax cuts and deregulation is probably the most significant reason we see the wealth gap start to take off. As well as a general change in attitude of CEO like Jack Welch who popularized the shareholder value movement in American business. He pioneered mass layoffs, cuts to pension, and investment cuts to increase paper prophets. Combined with the legalization of stock buy backs and you have today’s modern economy.
It’s a little ambiguous, because US Steel was actually the name of one of the biggest companies.
And yes, I could have written a lot more about Reaganomics, but I wanted to go with a very general outline.
It’s a little ambiguous, because US Steel was actually the name of one of the biggest companies.
Yes, I also could have clarified better, I was referring to the US steel industry as a whole.
Back in the day, Asimov named it US Robots because of US Steel.
Today, they are barely remembered.
So… Jimmy Carter is to be blamed? /s
No /s needed. The MAGAs totally believe it.
Capitalism
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.
What actually broke?
People figured out they could buy more than one house and rent it to other people, paired with a housing shortage partially due to people/companies owning all the houses, paired with technology to allow you to rent your houses out for a few days here and there to make income.
We allowed house ownership to become entangled with entrepreneurship.
that’s not broken though. this is how capitalism works at a temporal scale. we were marketed to and sold lies. on purpose. by monsters who have spent centuries making us think we can achieve a “dream.”
Gotta be asleep to dream!
…and it screwed EVERYTHING up;
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People can’t afford kids because the rents are too high,
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Rents too high for cool spaces to hangout in, so everybody’s at home and miserable.
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Rents too high for a cheap restaurant to open, so everybody’s mad and pointing fingers,
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Can’t find daycare, because it’s too expense for the daycare to rent a commercial property,
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Even before that there was a boom in people using houses as an investment opportunity instead of just a place for people to live. Land ownership became the get rich quick opportunity that people who don’t play the stock market could put their money into. Then the people who do play the stock market got into it.
Nothing broke, everything is working as intended
Not trying to refute this at all, but I’d love to see this same graph normalized for inflation.
That would be interesting, but I’m not sure how useful it would be given that “inflation” itself is a heavily massaged and manipulated metric. It’s one of the many layers of the illusion that the powers that be craft to separate us from the physical reality of why so many more of us have to work harder for the same or less. It only reflects actual reality to the extent it is politically necessary to so it can maintain some semblance of legitimacy. It may be better than nothing for adjusting such charts but it’s also misleading in its own way.
Needs log scale
Nothing broke.
This is capitalism working as intended.
Income growth broke as it hasn’t followed economic growth since the 70s.
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.
