"Back in my day, everything cost a nickel and we had to walk four miles to school, in the snow!" Everyone knows one of these back-in-my-dayers who loves to talk about how soft society has grown. Back in their day, you could buy a hamburger for a thumbs up, a gallon of gas for a smile, and a house for a couple thousand dollars. And today, that house is worth 30 times that! Or so they say.
This isn’t necessarily as impressive as it seems, though. For example, as 24/7 Wall Street, reports, a house purchased in 1930 for around $6,000 would be worth about $195,000 today. However, when you adjust for inflation, 1930s home values have increased less than one percent per year.
In fact, the largest jumps in real estate values occurred over two distinct periods. The first period was the post-World War II housing boom. As government rationing led to a limited supply of homes, the 1944 G.I. Bill that subsidized home purchases for soldiers increased demand even further. With such a heavy increase in demand, home values jumped upwards.
The second major spike came during the period that led to the Great Recession. Thanks to easy credit, a favorable tax policy, and low mortgage interest rates, the demand for housing went wild. And while homeownership peaked in 2004 at 69 percent, many of these homeowners were unable to afford their mortgages, and foreclosures caused home prices to drop sharply.
Other than those two periods, national home prices have remained pretty stable. If you want to check for yourself, just follow the link below and you can view the adjusted median home value, unadjusted median home value, and one-year change in real median home value for any year between 1930 and 2015.
PB Topical Ref
