Tag Archives: square footage

Why Was Housing So Much Cheaper in the 1950s?

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inequaltiMarketplace quoted me in Why Do Cars, Housing and Clothing Cost Much More Than They Did in the 1950s? It reads, in part,

Question: Why did a pair of jeans, a box of rice, cars, houses and other items that still exist today cost one price in the 1950s but now are so much more? They’re still the same products with very little change. In fact, due to automation, many of these things are actually cheaper to produce.

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Aren’t products today higher quality?

There has been an increase in the quality of some products over time, which means looking at costs from the 1950s vs. today can seem like an apples-to-oranges comparison.

One can make the argument that cars are equipped with better features than ones from the ‘50s. “We have all kinds of things like seat belts and anti-lock brakes and computerized systems in your dashboard,” Stapleford said.

But if you’re trying to determine affordability, you have to look at the options that are available to you at the time.

“If someone wanted a 1950 car, they couldn’t get it. You couldn’t go out and buy a car that’s exactly the same as it was in the 1950s. You don’t have that kind of discretion as a consumer. You’re sort of stuck with what’s available on the market. So you’re then forced, in a way, to buy this higher-quality thing, which you may or may not want,” Stapleford said.

If you’re comparing housing prices, you also have to look at changes in the types of homes people are buying.

A typical home in the 1950s could cost around $7,000 a year vs. about $400,000 now, said David Reiss, a law professor at Cornell University who studies housing policy.

But while today’s price is 57 times more the cost of a house in the 1950s, you have to adjust for inflation and look at the size of these homes. The average house is now much bigger, Reiss pointed out. So based on square footage, a home today is actually probably four or five times more expensive than one in the 1950s, Reiss said. They also have more amenities, he pointed out.

“The quality of the housing has gone up dramatically, and that’s probably reflected in the price to some extent,” Reiss said.

But there are still other factors explaining the increase in price, which include construction productivity and supply and demand. There are people who will pay $1 million for an apartment with a leaky roof because of the area it’s in, Reiss said.

In a lot of areas with job opportunities, the regulations that govern new construction are very strict, which contributes to these high prices, Reiss said.

Many Americans feel like homeownership has become increasingly out of reach.

There was less income inequality in the mid-20th century compared to now, Reiss said. In 1950, the household median income was $2,990, with the median home value about 2.5 times that. In 2024, the median sales price was almost five times the median household income.

There is one big caveat: Reiss noted that the housing market was “incredibly discriminatory” against different groups like Black Americans. But for those who didn’t face unjust policies, homeownership was more affordable.

“Now you have extreme wealth at the one end, and some very low incomes at the bottom end,” Reiss said.

Micro-Units for Millennials

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Construction Dive quoted me in An Emerging Megatrend? Developers Experiment with Microunits to Target Millennial Market. It opens,

As U.S. home prices and rents continue to soar, some developers are taking aim at a new target market — those willing to sacrifice square footage to be able to live near their work and area nightlife at a more budget-friendly price.

These microhousing units, also known as microapartments and microcondos, have most of the amenities of their full-size counterparts but typically range from around 350 square feet to 550 square feet, with some buildings offering up units at a relatively roomy 1,000 square feet. Many also come outfitted with furnishings specifically designed for the unit — folding beds, hidden storage and convertible pieces that do double duty, such as a dining table that also functions as a work desk.

However, the growing concept is seeing mixed results in the U.S. Is microhousing just a passing fad as younger renters look for an affordable stepping stone to a larger space, or does it represent a shift in what some Americans are looking for in a home?

The Draw of Smaller Spaces

Jam-packed cities like Tokyo are prime markets for these tiny units because the cost of land is at a premium, according to David Reiss, professor of law and academic program director at the Center for Urban Entrepreneurship at the Brooklyn Law School. Microunits are particularly appealing to single, young professionals who spend a lot of time working and hanging out with friends rather than entertaining in their own homes, he said.

The primary draw, however, is “location, location, location,” Reiss said. “When young adults are choosing between a small space in the center city or a larger space further afield, there will always be some who opt for the former.”

This hasn’t always been the case, according to architect David Senden, partner at international design firm KTGY. Americans used to put a premium on living space, but there’s been a “shift on the priority list,” and “location and has jumped to the absolute top,” he said. There’s also a growing desire for shorter commuting times.

However, whether the overall demand for microhousing is on the uptick is debatable. Some developers see microunits as the solution that will provide millennials with the opportunity to live in vibrant urban settings, as well as offer baby boomers or those looking to downsize a minimalist living space without having to give up the modern conveniences they’ve come to expect.

When Microhousing Is a Viable Concept

Reiss said population density  and high prices need to be components of any successful micro project . When prices, in both rent and homes, “outpace middle-class income,” as they have done in cities like San Francisco and New York City, then some people will give up square footage in order to stay close to their friends or jobs. “The microunit might present a very attractive trade-off of space and cost for that demographic,” he said. Reiss added that New York City is even amending its zoning laws to allow for more micro developments.