What was the average cost to buy a house or car in the 80s and 90s?

[KaliYoni]

One of the huge technical innovations of the 1980s was the standardized container.

Intermodal standardized shipping containers made their debut in the 1950s and really began taking off in the 1970s. The creation of an ISO standard for shipping containers happened in the late 1960s.

----------
For anybody interested in a deeper dive into the history of containers (yes, I'm one of the few financial markets and logistics enthusiasts in existence), this is a good book:

The Box

press.princeton.edu

 

[Apple fanboy]

So if house prices continue to rise much more than wages, then we will probably see an increase in mortgage lengths. In Japan I believe they do 50 year mortgages. You inherit what’s left of the debt.
Two people I work with have recently taken on 35 year mortgages. We reduced the term of our first mortgage and I had it all paid off in my late thirties. But then I recently took another as we moved to a better (more expensive) area that needed a lot of maintenance. It wasn’t the plan, but most of life isn’t is it? I have about 10 years left to pay. But I suspect we will reduce that term. We already have twice.

 

[pshufd]

So if house prices continue to rise much more than wages, then we will probably see an increase in mortgage lengths. In Japan I believe they do 50 year mortgages. You inherit what’s left of the debt.
Two people I work with have recently taken on 35 year mortgages. We reduced the term of our first mortgage and I had it all paid off in my late thirties. But then I recently took another as we moved to a better (more expensive) area that needed a lot of maintenance. It wasn’t the plan, but most of life isn’t is it? I have about 10 years left to pay. But I suspect we will reduce that term. We already have twice.

We bought in 1988 and paid it off in 2000 thanks to the Internet Bubble.

We've been debt-free since then. We managed a savings rate of 38% afterwards except for the years putting our kids through college.

 

[Apple fanboy]

We bought in 1988 and paid it off in 2000 thanks to the Internet Bubble.

We've been debt-free since then. We managed a savings rate of 38% afterwards except for the years putting our kids through college.

You did better than I did then. Unfortunately we have been a single wage earner household for the last 20 years. My wife doesn’t work so I don’t have that amount of spare cash!

 

[pshufd]

You did better than I did then. Unfortunately we have been a single wage earner household for the last 20 years. My wife doesn’t work so I don’t have that amount of spare cash!

We've always been a single-income family. My wife worked before we got married and was a resident of Australia at the time. My job was generally 60-80 hour weeks though.

 

[AustinIllini]

You have to factor in interest rates, because monthly payments determine affordability. Rates in the 80s were brutal.

Prices were SOOOO much lower it's not actually a factor.

 

[HobeSoundDarryl]

We bought in 1988 and paid it off in 2000 thanks to the Internet Bubble.

We've been debt-free since then. We managed a savings rate of 38% afterwards except for the years putting our kids through college.

Way to go! I did something similar many years later. Debt-free is the way to be. In personal prosperity times, cash that could have been sucked up by debt holders piles onto savings/retirement. In difficult times, not having "must pay" payments helps weather any downturns.

I wish many more people could achieve it vs. being debt slaves for life, whether by (bad) choices or, unfortunately, no choices. All of the borrowing from the future to buy things in the present is great for an overall economy but can doom those who max that leverage out to living in or near poverty for their not-so-golden years. I know too many people who are trying to pay down a mortgage only on Social Security income. Odds are, many won't be rid of the mortgage before they pass.

 

[C0ncreteBl0nde]

My ex-husband and I bought a 3 bedroom, 2 bath house next to the Country Club for $44,000 in 1987. It was a bit of a fixer-upper, but turned out to be a really nice house. I think a new car will cost you more than that today. 😀

 

[dukebound85]

Back to OPs apparent point, perhaps further clarified by the reaction in post #66, it's only "Wow cheap!" relative to income and pricing now. Again, the grandfather who could buy that good home in 1920 was probably paid about the average annual salary of only about $3,200 per year. 2020 people had median income of about $56K. So Grandfather from 1920 would think Grandson is freaking rich based on a peek at 2020 average income only... UNTIL he got to see what common things cost in 2020.

20 & 30-somethings now will likely see the same effect when they become the Grandfather. Grandchildren out in 2063+ might be awed that it was possible for an individual to actually own a home back in 2023 and that they many could be purchased for well under a million dollars... or perhaps two million dollars. And next-gen Grandfathers will talk about "the good old days" when it was possible to buy 2023 homes for so "cheap", etc.

If someone could take their 2020 income back to 1920 to buy a home, it would only cost about 1/5th of annual salary. If someone today has a little savings discipline, they could probably pay cash for home out of a portion of one-years pay.

However, it is not close to the same ratio if your 1920 grandfather could bring his annual salary to 2020 to buy a home. While about 3 years of salary could fully cover a good 1920 home, 3 times $56K in 2020 will likely struggle to buy an equivalently good home. Median home price in the U.S. in 2020 was $322K. 3 times Grandfathers pay applied in 2020 might not even quality for enough downpayment. Could Grandfather even rent a home for more than a few months for 100% of his gross 1920 pay in 2020? No.

Inflation gets the blame for that gigantic difference. However, the great widening seems well beyond an explanation of a simple concept like inflation. I suspect the 1920 home sale had the vast amount of the money buying the home itself (the materials of the home). The 2020 home has a gigantically fat margin on it... which can be spun as tied to the word inflation but is- IMO- heavily influenced by a few generations of people just opting to "stretch" to pay more and more and more so that all of the parts & pieces that go into the home could "inflate" profits and the builder could also inflate their big cut too. I don't foresee anything changing that going forwards unless consumers decide to value the money like they wish it should be valued... which manifests by opting to NOT pay any ever-increasing price asked for everything.

the avg home today is significantly larger than the avg home in the 1920s also.

 

[KaliYoni]

Some things to keep in mind about the history of housing prices in the US:

• Inflation, of course, should be taken into account when comparing historical prices to current prices.
• Housing prices have been greatly influenced by the 30-year fixed mortgage that started becoming widespread in the 1950s. This affects the applicability of simple comparisons of prices from different eras.
• The 30-year fixed, with implicit backing from the federal government, mortgage is a unique feature of the US housing market.
• When discussing gains and losses from investments using borrowed money, leverage effects are important. Essentially, leverage amplifies gains and losses for the borrower. So the actual net gain or loss from buying a house is not simply the selling (or current market) price minus the price paid.
• The real estate market is highly frictional. The market value of a property will not be the same as the amount of money actually received by a seller in most cases.

 

[smoking monkey]

Yes, but do you know the average rent prices in Boston is 2,800 dollars and as mentioned above the average student loan is 300 dollars a month. Fresh graduates cannot even afford a single bedroom apartment.

I was specifically talking about buying, but that's rough.

Although if the rent is too expensive, move further out or move to a different city to pursue opportunities. America is the land of immigrants. So many have left behind everything to go there to start a new life. I think we sometimes forget what our parents and grandparents went through. For example: My mother at the age of nine had to help build her family's house. I can't imagine that happening in a first world country today. Yet in the 1940s, that happened. My father had polio, yet not once have I ever heard him talk about it.

 

[smoking monkey]

20-somethings today cannot afford to buy a house...

I'm not discounting the rough economic times we live in. But that's simply not the case. It's certainly not without sacrifice though. How much are you willing to sacrifice?

 

[HDFan]

Knew some folks that built their new home in the 50's for ~$16K.

Last time it sold years ago it went for millions. New owners tore it down to build an oversized hideous McMansion.

 

[rm5]

That's the one thing I'm a bit concerned about—I hope housing prices go down by the time I graduate college, so that I can afford to live in a decent living space. And that I can find a good-paying job to keep up with the high cost of living (but that's an entirely different discussion). Being able to afford a car I'm a little less concerned about.

 

[Apple fanboy]

That's the one thing I'm a bit concerned about—I hope housing prices go down by the time I graduate college, so that I can afford to live in a decent living space. And that I can find a good-paying job to keep up with the high cost of living (but that's an entirely different discussion). A car I'm a little less worried about.

But as a musician surly you need a car to move your stuff?

 

[rm5]

But as a musician surly you need a car to move your stuff?

I meant "less worried" in the sense of being able to afford a car

 

[maflynn]

I was specifically talking about buying, but that's rough.

Yeah, its horrible, there has not been any sort of correction, as there has been in prior years. Boston is frequently in (or near) the top 10 cities of the most expensive places to live. We are blessed to have so many great colleges and universities yet for those graduates they cannot afford to rent, unless they get roommates.

Although if the rent is too expensive, move further out or move to a different city to pursue opportunities

People who can afford to do that, are certainly doing that, both for renting and buying. I had a friend who's a first time buyer, making a really good salary, yet he could not afford to buy a house where he lived (East Boston). He's now living in a town on the Massachusetts/New Hampshire border and his commute into Boston his like an hour to two hours instead of mere minutes

 

[pshufd]

Yeah, its horrible, there has not been any sort of correction, as there has been in prior years. Boston is frequently in (or near) the top 10 cities of the most expensive places to live. We are blessed to have so many great colleges and universities yet for those graduates they cannot afford to rent, unless they get roommates.

People who can afford to do that, are certainly doing that, both for renting and buying. I had a friend who's a first time buyer, making a really good salary, yet he could not afford to buy a house where he lived (East Boston). He's now living in a town on the Massachusetts/New Hampshire border and his commute into Boston his like an hour to two hours instead of mere minutes

The traffic on Route 3 between NH and Boston and 93 from Boston to NH is nuts in the morning and afternoon. Traffic is getting harder and harder earlier and earlier in the afternoon. When I need to go into Boston for the morning, I leave at 4:30 AM and there's next to no traffic. There is if I leave at 5.

A good chunk of the Massachusetts subreddit discussion these days is about rent and buying a home.

 

[maflynn]

How much are you willing to sacrifice?

I think that's not entirely correct, I know many people who would love to buy a house, and are trying, but the housing situation in Massachusetts make its a struggle as I said earlier.

Painting people who can't buy houses as unwilling to sacrifices is inaccurate. My stepson, has been trying to buy a house for years. He's saving, scrimping, and sacrificing its hard for a single person to buy a house in Boston (yes in the city). Many (far too many imo) houses are closer to million dollars then not in Boston. There are sections of the city where housing is well under a million but those areas are riddled with drugs and crime.

A million dollars - that's crazy, if you are lucky enough to save up 20% (that's 200,000 dollars), your monthly mortgage payment is over 5,000 dollars a month not including escrow.

As for my stepson, he's been looking at properties in the 700,000 - 800,000 dollar range - many of them can be called handyman delights.

 

[Apple fanboy]

I think that's not entirely correct, I know many people who would love to buy a house, and are trying, but the housing situation in Massachusetts make its a struggle as I said earlier.

Painting people who can't buy houses as unwilling to sacrifices is inaccurate. My stepson, has been trying to buy a house for years. He's saving, scrimping, and sacrificing its hard for a single person to buy a house in Boston (yes in the city). Many (far too many imo) houses are closer to million dollars then not in Boston. There are sections of the city where housing is well under a million but those areas are riddled with drugs and crime.

A million dollars - that's crazy, if you are lucky enough to save up 20% (that's 200,000 dollars), your monthly mortgage payment is over 5,000 dollars a month not including escrow.

As for my stepson, he's been looking at properties in the 700,000 - 800,000 dollar range - many of them can be called handyman delights.

I think it’s a mixture. Some young people have saved and managed to get a foot on the ladder. Others decide it’s too expensive so spend a fortune on eating out, latest phones and a new car every few years. If you can’t afford to buy on your own, then club together with a friend or family. It’s not always people’s first choice but gets you started.
The alternative is to rent your entire life. That’s just paying someone else’s mortgage!

 

[pshufd]

I think it’s a mixture. Some young people have saved and managed to get a foot on the ladder. Others decide it’s too expensive so spend a fortune on eating out, latest phones and a new car every few years. If you can’t afford to buy on your own, then club together with a friend or family. It’s not always people’s first choice but gets you started.
The alternative is to rent your entire life. That’s just paying someone else’s mortgage!

This is one of the neighborhoods of Boston. It's a clean, safe and gentrified. I had a girlfriend who lived there back in the late 1970s and we used to go there but she told me stuff indicating that it was not a place to go to if you weren't white. I'm Asian so I guess that nobody bothered me. There were places back then where you didn't go if you were white as well. Charlestown turned into more of a Yuppie place in the late 1980s and 1990s and I think is more diverse today.

It's one of the places in Boston that I wouldn't mind living in because of the safety aspect. It feels more suburban than the West End (son had an apartment there for several years), Beacon Hill, Back Bay and I think that one of the reasons for that is the lack of public transportation (MBTA). That's the main knock on it in that you either have to walk or drive or take a slow bus to get across the river into Boston proper. There is actually a decent amount of housing stock for sale there right now.

Boston is expensive. If you're a dual-income couple making $150K each, you can swing a big mortgage, particularly if you have a good down payment. That's completely possible if you hit the lottery on stock options; and there are plenty of companies in the Boston where it has happened. Or if your parents can co-sign for you or buy it with you. Just outright giving you a down-payment probably has gift taxes kick in.

 

[dukebound85]

I think it’s a mixture. Some young people have saved and managed to get a foot on the ladder. Others decide it’s too expensive so spend a fortune on eating out, latest phones and a new car every few years. If you can’t afford to buy on your own, then club together with a friend or family. It’s not always people’s first choice but gets you started.
The alternative is to rent your entire life. That’s just paying someone else’s mortgage!

Yes

I have many friends who have multiple properties and upwards of 20 by their late 20s/mid 30s. Colorado is not exactly a cheap cost of living area along the front range either.

It is more about making it happen vs blaming the market. Many who complain about not having a home either do not make it a priority, spend on things that prevent them from qualifying to get a mortgage, or simply sit on the sidelines complaining about the prices and hoping they fall while missing out on a great time to get in.

I know for me, sometimes you buy a starter home in an area that is not ideal and then use it as a means to get into the area you want to live later. Many people think they can maintain the quality of life/situation they are used to from living with parents without realizing you have to take steps to get there and that it does not come right away.

Even in 2010-2012, people would be scared to buy thinking overpriced due to the correction and then missed out once they rebounded.

Homes have always been considered expensive.

 

[maflynn]

I think it’s a mixture. Some young people have saved and managed to get a foot on the ladder

Oh no question, there's not a single reason, I was just responding to the idea that people are unable to buy homes because they're going out to eat and not sacrificing enough. I think so many young people would want to buy a house if they had the opportunity but far too many are living check to check given the economic situations of 2023, i.e., high rent, high living expenses, salaries and raises are on the low end for many people

 

[pshufd]

Yes

I have many friends who have multiple properties and upwards of 20 by their late 20s/mid 30s. Colorado is not exactly a cheap cost of living area along the front range either.

It is more about making it happen vs blaming the market. Many who complain about not having a home either do not make it a priority, spend on things that prevent them from qualifying to get a mortgage, or simply sit on the sidelines complaining about the prices and hoping they fall while missing out on a great time to get in.

I know for me, sometimes you buy a starter home in an area that is not ideal and then use it as a means to get into the area you want to live later. Many people think they can maintain the quality of life/situation they are used to from living with parents without realizing you have to take steps to get there and that it does not come right away.

Even in 2010-2012, people would be scared to buy thinking overpriced due to the correction and then missed out once they rebounded.

Homes have always been considered expensive.

Back in 2010-2012, I recall seeing homes for $5,000 in rust-belt cities. Many of those cities have improved from back then and I imagine those homes are worth far more

If you want to live in the nice areas, though, there's a ton of demand.

 

[pshufd]

Oh no question, there's not a single reason, I was just responding to the idea that people are unable to buy homes because they're going out to eat and not sacrificing enough. I think so many young people would want to buy a house if they had the opportunity but far too many are living check to check given the economic situations of 2023, i.e., high rent, high living expenses, salaries and raises are on the low end for many people

Buying homes is something risk-takers do as there's a ton of inherent risk in doing so. On an objective basis, there are more obstacles to home ownership today than there was when we bought our first home. There were risks but it was just felt far less risky when we did it. We didn't have the issue with student loans at all because college was so cheap back then and there was a lot of grant money which later turned into loans.

There was a ton of home construction from returning WWII veterans and lots of tract housing built really inexpensively and those came up for sale in the 1980s as the veterans were selling their homes after their kids were raised. Home construction has been less than population growth I think since the 1980s so lower supply and increasing demand means prices go up. We have had a lot of natural disaster the past couple of years too which probably decreases supply.

I do think that it's a lot tougher now then when I grew up.