About Those 1950s Home Prices

Curated Mid-Century Modern Home Listings from Across the U.S.A. 🇺🇸

Jan 29, 2024

94% of Americans (polled in 2023) said that home ownership was an important part of the American Dream. The bitter reality is that for many, the combination of high prices, rising rates, and other expenses (i.e. student loan payments) is making that dream feel unattainable. Today, we’re looking back at housing prices from a bygone era. How good did post-war Americans really have it? Let's take a trip back to explore the world of 1950s home prices and understand what made the era so unique.

An ad for new Eichler Homes in the SF Bay Area, California

The 1950s were a decade marked by economic growth, rising wages, high birth rates, and a surge in homeownership. The median home price in the United States in 1950 was $7,354, a stark contrast to the median price of $431,000 in 2023 (Source: U.S. Census Bureau). This significant difference, even when adjusted for inflation, translates to a 2023 median price of around $89,300 for a 1950s home. In 1950, the average home price-to-income ratio was well below 3.0., meaning that a home generally cost a family less than 3 years of total household pre-tax income. Today, that same ratio is over 9.0 for states like California and Hawaii.

So why were homes so affordable in the 1950s? Well, for lots of reasons, including the post-World War II economic boom, government policies that encouraged homeownership and building, the rise of mass-produced housing developments, and the simple fact that there was still abundant undeveloped land in America. The post-war economic boom led to a surge in employment opportunities and rapidly rising wages. The GI Bill, passed in 1944, provided low-interest rate mortgages to veterans, making monthly payments super low. Additionally, the Federal Housing Administration (FHA) further expanded access to mortgages by insuring home loans for borrowers with lower credit scores.

Amidst this growing demand for housing, mass-production techniques were employed to construct homes more efficiently and at lower costs. Levittown, New York, stands as a prime example of this phenomenon, where an impressive 17,000 new homes were built using standardized designs and assembly-line methods.

In a previous post we talked about one such 1950s mass home builder, Joseph Eichler. Eichler homes took a pragmatic and accessible approach to modern housing, using simple, open-floor plans and readily accessible materials. Over 11,000 Eichler homes were built across California and remain beloved and highly sought after today, 70+ years later. They also provide a clear case study on our topic of soaring housing prices. When new, ‘Eichlers’ sold for between $9,000 and $12,000. Down payments were as low as $300 and most monthly payments were between $60 and $80. Adjusted for inflation, the average Eichler home would set you back ~$120,000 in today’s dollars. That same Eichler home today sells for roughly $2,000,000, and even more in highly sought after communities like Palo Alto.

A 1,800 sq. ft. Eicher home currently for sale in Palo Alto asking $2.9M, roughly 250x what it sold for new in 1958.

As great as the housing boom was, it's important to note that the 1950s market was not without its challenges. The affordability of these shiny new homes was often limited to certain demographics and geographic areas, with racial and economic disparities persisting. Additionally, the mass-production of homes led to valid concerns about build quality, homogeneity, and a lack of architectural diversity. Simply put, not all 1950s tract homes have aged as well as the Eichlers have.

Also worth noting, despite the ‘baby boom’, homes were smaller and more simple in the 1950s. The average home sold during the decade was just 983 square feet. Pretty tiny, compared today’s average of 2,500+ square feet. Other amenities we take for granted today, like air conditioning and indoor garages, were far less common. All these factors should be considered while comparing housing prices from the era.

The affordability of housing in the 1950s had a profound impact on American society. It contributed to the rise of the middle class, as families were able to accumulate wealth through homeownership. It also fostered a sense of community and stability, as neighborhoods were built around shared values and experiences. Despite its limitations, the 1950s serve as a reminder of a time when homeownership was within reach for most Americans. The lessons learned from the era can guide policymakers and the housing industry in their efforts to address the affordability challenges faced by today's homebuyers.