My father's house was built in the 1940's and is as you described.
It's now going for over $225k in a flyover state. He bought the place in the 80's for $72k on a $40k/yr salary - and the job he held to pay for it pays $44k/yr today. The exact same house is out of each for the exact same job today.
Housing has skyrocketed by all available metrics. The one that matters most of course is % of after tax income spent, and it's never been higher.
Unless you've already accounted for inflation, that $72k house (assuming it was bought in 1985) actually cost about $172,000 in 2018 dollars.
That means the house's value increased by about 30% over the past 33 years. I don't know the specifics of the situation, but some of that 30% is probably from increased economic development in the area it's in. Some may also be from improvements made to the house.
Regardless, phrasing it as "house used to cost $72K and now costs three times that" is inaccurate and misleading.
The other part of the problem is that the income for the same job has only increased by $4,000/year in the past thirty years, while it should have increased by about $50,000 over the same time to keep pace with inflation.
That's a much more serious problem than increased housing costs.
Disclaimer: I am not an economist so my understanding of the situation might be horribly flawed. Please correct me if that's the case.
Interest rates is mainly the issue. Money is insanely cheap right now (and has been for many years) making assets rise in value. Bump a mortgage to 14% like it was in the early 80’s and you’d see the home price cut in half.
I remember being a kid in the 80’s and getting 5.4% on a savings account!
Mortgage interest rates were about 12% in the 80's, and as high as 18%(!) in 1981. At 20% down, the 30yr fixed mortgage would have been $600/mo at 12% vs $900/mo today at 4.5%.
It was much easier to find places like that, though.
The rust belt was booming then. There were more options. Now for the best opportunity you have to take a risk and live in the major cities with astronomical housing prices or long commutes.
It never ceases to amaze me that people seem to be under the impression that there's no good jobs anywhere that isn't the coast. Oh well, I guess we silly flyovers can just keep this affordable and comfortable living situation to ourselves.
You've missed my point, or perhaps I wasn't clear enough, from parent:
> The other thing people were more willing to do in the 1940s was move to where they could afford to live.
Where can you move today that offers affordable living and a good, steady job? Lets say you were on the expensive east coast and wanted a cheaper, more affordable place to live, with work. You'd consider Pittsburgh or Detroit, maybe. Both tick the boxes - affordable, plenty of good, union jobs, enough to own a home and build a family.
Does Pittsburgh fit that bill today? The answer is unequivocally no. Sure, housing prices are down compared nationally - but the last 10 years have seen a boon in housing prices here. Flipping is happening like crazy. Rents have increased. But wages have not - because cost of living adjustments punish employees in places like Pittsburgh.
I assume you're coming from a tech perspective. It's easy for that to skew your PoV. Think of it as the lay person. It's a much riskier prospect today.
Pittsburgh is one of the worst cities in the country for retaining recent college graduates (Pitt, CMU, Duquesne, etc). Why? The job market simply isn't large enough.
Pittsburgh is a single city, though. There's a fair number of cities that do fit that bill - Des Moines, Kansas City, Minneapolis, Omaha, Cincinnati, etc etc. Pittsburgh is in an awkward point where it's trying to become more of a tech hub, but the jobs haven't started popping up to actually fill that void quite yet.
I am coming from a tech perspective, but most of my friends and family are not. Their stories aren't wholly dissimilar - those of us who were in tech could afford homes faster than those who are not, but most everyone who is aiming to achieve that goal isn't having a problem doing so around here.
It's now going for over $225k in a flyover state. He bought the place in the 80's for $72k on a $40k/yr salary - and the job he held to pay for it pays $44k/yr today. The exact same house is out of each for the exact same job today.
Housing has skyrocketed by all available metrics. The one that matters most of course is % of after tax income spent, and it's never been higher.