Increase In Housing Quality And Its Effect On Home Values: 1940-2010 [CHART]

By Catherine Mulbrandon
VisualizingEconomics.com

Our homes have changed in many ways over the last 70 years, including homes size, building technology, family size and a rise in standard of living. As people's income increased over the 20th century, they bought bigger and better homes. This caused the median home value to go up even when taking into account the effect of inflation. For example, a full bath costs a lot since you need double plumbing for hot and cold water, while a flush toilet needs a home connected to a sewer system or septic tank.

In addition, housing costs include both land and the house; where building space in limited -- i.e. cities -- land will increase in value with population growth.

Median home value calculated by the U.S. Census factors in all of these changes and covers the housing markets in both rural and urban areas. The historical price index created by Robert Shiller, however, looks at home prices as an investment (like stocks), focusing on the resale prices of a subset of the standard, unchanged houses in large metro areas.

Visualizing Economics is a website by Catherine Mulbrandon dedicated to publishing infographics about economic data. Visualizing Economics has been featured at Slate.com, NPR.org, WashingtonPost.com, The Big Picture, Seeking Alpha and on MSNBC

Find more graphics explaining the U.S. economy at VisualizingEconomics.com

• Data Source for Housing Price Index from Robert Shiller's Irrational Exuberance
• Median Home Values: Historical Census of Housing Tables Home Values; "An Approach for Calculating Reliable State and National House Price Statistics"
• Characteristics: Housing Characteristics In The U.S. and Median and Average Square Feet of Floor Area

Comments

[Miller Plante]

06:19 PM on 04/05/2011

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[deepintheheartoftejas]

02:03 PM on 04/03/2011

Is a 70 year time-frame really a "race"? Also, the size of houses since 1940 has about doubled... but so has the rate of indoor plumbing.

You could just as well have a headline "Americans' Race to Own Flush Toilets".

[redraspberry]

03:51 PM on 04/01/2011

The county I live in has a 1500 sq ft minimum for a new rural house. If it is in subdivision it needs to be 1800 sq ft. Much more house than I need. They base the property tax on house value so are forcing people to pay more into the county coffers with houses larger than needed and more expensive to build and maintain.

[spinotter11]

11:03 AM on 04/01/2011

Here are my profound thoughts. America has always been a place with a frontier ethic, always wanting to go to the new place. The real frontier closed in 1890 or so, but we have extended the frontier by going to the suburbs, the exurbs, and the absurd burbs (more than 50 miles from town but still in it - or is that creeping megasubslumopolis?) We need to densify our society, all live in big conglomerations together, and use public transit only to travel between the big blobs of population. High-speed rail, fast metro systems, etc. And that way we can preserve and reclaim much of the areas currently devoted to decaying cities, wasteland suburbs - you know the scene. But we need a will to do this. We need to be more like the Asians or Europeans, because our population size and density is increasing. No more new housing. Take back as much of the schlock back to nature. Densify. Public transit. Beautiful open spaces and agriculture. How does that sound for a dream? No motor cars anywhere.

[CAK]

12:12 PM on 04/01/2011

You are one crazy and scary person. No one should decide how we live but us. If people want to live in suburbs and drive cars let them. If the streets become too congested then they can decide to switch to mass transit. New housing should be built as long as people have the resources to buy and and want it.

I for one do not want someone like you deciding that I need to live in a densely populated city in some small apartment somewhere without a car. That may be your vision of something great, but its not the vision of most Americans. We unlike the Europeans have vast amounts of land in this country and with the advent of telecommunication technology, do not need to go to an office everyday for all jobs. Therefore someone can live 50 miles from a city center if they only go in once a week or not at all because the office is located in the suburbs as well.

People should decide for themselves how to live, not the government and certainly not you.

[spinotter11]

06:52 PM on 04/03/2011

There are many possible paths of sustainability. Live where you live, get all your food locally, telecommute to a job anywhere on the globe, and never get into a motor vehicle. It is possible and desirable.

[anothervoice]

09:09 PM on 04/03/2011

You should never start a post by accusing someone of being crazy and scary lest you end up looking that way yourself.

Spinotter makes valid points. Our way of life is not sustainable. And we export our expectations to other countries. And densification is the trend they're teaching in land planning and civil courses. There's precious little real frontier left.

And people are deciding our future for us now. You don't think requiring a minimum square footage for new homes is controlling? The only maximum limit is where you butt against the property setbacks in come communities. You can touch the adjoining houses eaves if you stand on a ladder...

[Anne Mccormick]

12:28 PM on 04/01/2011

what drug are you currently using? what ever it is please stop.

[spinotter11]

06:51 PM on 04/03/2011

You could not even imagine such a world? And yet I tell you that you would be much happier there, as we all would.

[camelias and sweet tea]

08:55 AM on 04/01/2011

Oh no, isn't this part of what got us where we are now. Even if you get your home cheap, and cannot afford to heat it, what good is it. Stay real and stop trying to impress the Joneses. We all have too much stuff.

[CAK]

09:11 AM on 04/01/2011

I think you are correct that this type of overspending got us to be where we are now. Individuals and governments have been overspending for some time assuming that growth will always be there and without savings to back them up.

It is arrogant, however, for you to assume that you know the heart and mind of someone by the house they have. There are plenty of people with large homes that are not keeping up with anyone and simply put a premium on more space or have a larger family. Some people place a high value on vacations and spend more on that or on hobbies like boating or golf.

Besides, what may seem big to you may not to me or vice versa. What constitutes "big" in a house anyway? 1500 sq ft? 3000 sq ft? 5000 sq ft? It varies by location (eg big cities less space) and purpose (eg, size of family, vacation home, etc.) and likes/dislikes.

BTW, paying the purchase price is not the only cost to take into account when you purchase a home so if you cannot afford the heat, you should be looking for a different home. You also need to pay other utilities as well as upkeep on the house.

[camelias and sweet tea]

09:30 AM on 04/01/2011

Thanks for you advice, but I have owned 3 homes that were sold or paid off and now still have a home that has no mortgage and we are able to maintain our lifestyle quite well. I see it everyday that people want BIG whether they can afford it or not. And some even thought that interest only loans was the way to get the BIG they wanted only to default. I feel that we all have too much stuff (me included) and I have stopped buying things that I do not really need.

[Bigleague]

03:26 PM on 04/03/2011

I do partly agree with that.
But then I look at the 375 s.f. apartment in New York that costs 15 times my 2200 square foot home with 1/3 of an acre.
It is kind of relative.
Still the keeping up with the Joneses or outdoing them is a really bad trait that had developed in a lot of people.
And CAK, below, has some very valid points too. Some value the home more than other things. Some have smaller homes because they would rather have money to spend on other things.
And some people were fine at the point in time when they bought their home and then various things may have happened. They were not educated about ARMs. One or the other lost their job and then had to take a lower paying job if they could even get one. The value of their home went down by 1/3 through nothing they ever did and they can't sell it without still owing a lot of money they probably don't have. Or they simply couldn't sell it at all.
There are so many factors and not all situations can fit into any one cubbyhole for labeling.

[camelias and sweet tea]

06:01 PM on 04/03/2011

It IS all relative. We were lucky enough to get out of New York retired down South have the biggest house we ever had, but it was the least expensive also. It does all depend on various factors I guess.. I do however get angry at the people who knew damm well they could not afford the home they bought and paying interest only was just dumm.

[Zilo]

08:33 AM on 04/01/2011

It's articles like this that remind me just how unsustainable the American Dream is. Not to mention our economy based on it. We can't keep telling people conflicting things: oh, the American dream takes hard work and if you don't have the money to buy a house, you should wait (which could mean you will die in an apartment on today's wages in many cases) and that oh, it's unAmerican not to buy, buy, buy! Buy everything! You keep the job market working!

One day people are going to figure it out. And sorry to say it, but even many of those aspiring to live in Mcmansions built off of the American "buy at all costs" mantra, are going to find out the reality: that only those currently living in these houses can even afford them. And I'd be willing to bet if people started spending less, even many in those mansions are going to realize the folly of spending tens of millions on these houses and their upkeep.

[CAK]

09:31 AM on 04/01/2011

The American Dream is not unsustainable as you suggest. If a person works hard and acquires skills that are demanded in the marketplace, then they will get ahead. A recent report cited that there is a shortage of skilled business people and that is going to grow over time. It is true that someone cannot graduate from high school get a job at the local factory and expect above normal wages and benefits for the rest of his/her life with a sizable pension waiting for them when they reitre.

Today going to high school is not enough, a person has to get a college degree and probably an advanced degree throughout their career to keep their skills marketable. I see many people living the American Dream because they know that they have to keep their skills up to date. The ones who are not making it are the ones who seem to want to keep their same jobs forever and do not have the motivation to better themselves.

I agree with you that people have gotten into the "I have to have it" mentality and have overspent on items, not just homes. They made the same mistake that government has over the last 20 years by spending too much and assuming positive growth. Both individuals and the government need to spend less and save money to be ready for inevitable downturns.

[Zilo]

12:49 PM on 04/01/2011

Maybe I should clarify my post:

The American economy--capitalism--is based on keeping a certain percentage of the population in poverty so that wealthier groups can get the lifestyle THEY want. I'm not saying that I think people who work as cashiers should earn as much as CEOs of companies. But do you think it's healthy for an economy if most of the economy is service based, and yet most people who work in those industries can't afford to pay rent and bills and actually be able to make it on their own? Some people have family, of course, but certainly many can't depend on family. They can't go to college either. Conservatives here say to save up for college and not go into debt, but what they don't understand is that the cashier struggling to pay rent and bills has virtually NO money to save up for the college and big future dreams. In the past, that's happened. It happens sometimes now, but it's not the norm without some kind of help. That's because our economy is so focused on buying, companies are so focused on getting people to buy more, to buy even more expensive that the cost of everything is going up.

Realistically speaking, most people will NOT be able to go to college and keep their skills fresh. That's a pipe dream. The only reason so many have been able to do it so far is loans. NOT sustainable. Wake up already.

[Euglena Vorticella]

08:08 AM on 04/01/2011

More tax cuts, please. I need a 12,000 square foot house.

[CAK]

09:01 AM on 04/01/2011

You must pay a tremendous amount in taxes if a tax cut will allow you to buy a 12,000 foot house.

[local21]

07:29 AM on 04/01/2011

They are making homes out of the one way incoming containers that have destroyed our trade balance because nothing is going back. To add insult to injury you could be living in a steel box because you lost your job to the foreign national corporations.

[CAK]

12:13 PM on 04/01/2011

Where?

[osofar]

05:55 AM on 04/01/2011

Pretty soon, we will all be living in NYC tenements, circa 1900 (if we are fortunate)!

[CAK]

09:32 AM on 04/01/2011

I feel sorry for you being so pessimistic. You must be a very depressed person.

[rchwel]

09:53 AM on 04/01/2011

Well aren't we Mr( Ms) the sun will come out tomorrow. Maybe on your perfect planet everyone has a good paying job, there is no unemployment, everyone owns their home and college education is afordable but on planet earth that is not the case, so feeling optimistic about the future is at the bottom of the list. I get the impression you are a realtor or banker , loan officer or a puppet for the corporations. All a hs grad has to too forward too is working at Wal Fart or Mc Stupids.

[osofar]

05:53 AM on 04/01/2011

The best houses were built around 1900. They were built to last.

[spinotter11]

08:07 AM on 04/01/2011

I agree. Mine was built in 1918 and is a Craftsman house. Everything in this house is in good shape after 93 years, everything straight and solid. I can't say that I love the style as much as a Federal house or a Victorian, but it is SOLID and WARM in the winter.

[rchwel]

09:56 AM on 04/01/2011

I come from a 4 generation construction family and I really enjoy loooking at homes built in the early 20th century, the incredible craftsmanship, the detail, the crown molding and real wood used.

[PuSencer]

06:47 PM on 04/01/2011

i dunno, my house was built in 1912 and the wind blows right through it-- and the chimney leans a little

[ReckingBall]

05:11 AM on 04/01/2011

The one in the pic looks cozy to me.

[Laurent Wagner]

04:50 AM on 04/01/2011

As of August 2010, there were only 13 super insulated houses in the US.
A super insulated house needs virtually no heating or cooling.

[CAK]

09:55 AM on 04/01/2011

OK. I understand the concept, but does the energy cost savings coer the increased construction cost for the additional size of the walls and ceilings for added insulation? Also, is this concept make economical and technology sense in extreme climates like the upper midwest or southwest (desert)?

[Laurent Wagner]

05:25 AM on 04/02/2011

- A house built with insulation clay bricks have an average service life of 120 years.

- Is it possible to add external insulation to the exterior walls of a house.

- It's possible to use a organic insulation made from recycled blue jeans.

- In extreme climates like the upper midwest or southwest, a super insulated house doesn't need a air conditioner.

In Texas, at the hottest time of the year, people can use 2,500 kWh a month.

- Wars in Iraq and Afghanista­­­­­­­­n could cost $2.4 trillion dollars.
$2.4 trillion dollars, it's far enough to insulate all the houses in America.

[sproshua]

04:46 AM on 04/01/2011

wow, the bush years are just the gift that keeps on giving. i look at the chart and see we are right back to where we should be according to the slope given by previous (pre 2000) decades. what a phony empty decade...

[R2D2-51]

02:22 AM on 04/01/2011

PART II
They were all tradesman working construction who helped me build it with cases of Pauli Girl as payment for services rendered.

Thus my cost was materials only.

That's my Cookbook Recipe for a home. Last year my best friend drafted the plan for his swimming pool and his 2 brothers and I finished it over the summer last year. Cost him 10k doing it him and its better than any regular concrete custom built pool you will see in any home.

DIY it’s the only way to go.

[fgbouman]

04:59 AM on 04/01/2011

Impressive. My hat's off to you.

[R2D2-51]

02:03 AM on 04/01/2011

I drove by to see it late last fall and it’s selling for 2.5 million in a depressed market.

Go figure?

As long as we live under the brand of Neoliberalism whose only means of survival is a built in formula of required Capital accumulation & inequality to survive means that without any intervening measures to throttle it sideways and vertically downward it will ultimately be the undoing of humanity for which it has already undermined our best interests when a system refuses to allow alternatives and free market innovations to flourish when ranking powerful Capitalists use their capital to prevent humanity’s progress out of self-interest which in the end will destroy the natural resources & earths living systems already in a rapid state of decline eventually to foster our own ability to survive as a meaningful living organism on this planet.

The sooner that humanity can grasp the full meaning of the plight in which our whole existence has been cast into a system impossible to throttle and change as the immense power of multitudes of trillions to lay waste to any effort to do so leaves humanity no hope but a status quo of continuous decline for which humanity is incapable of reversing.

[NYCAbroad]

02:55 AM on 04/01/2011

Very well summed up, two thumbs vertical. The sobering reality is that the overwhelming majority haven't a clue or worse, an interest understanding this message.

[plumbergirl]

07:24 AM on 04/01/2011

After reading this, why do I keep thinking about Soylent Green.lol