> Median family income adjusted for inflation was $29,000 in 1955. In 1965 it was $42,000. Today it’s just over $62,000. We think of the 1950s and 1960s as the golden age of middle-class prosperity. But the median household today has roughly twice the income as the median family of 1955.
I mean, sure, but I'm pretty sure the median household income today is from 2 working adults, where 1955 and 1965 are a single working adult.
There's also purchasing power, which isn't touched on here. Yes, TVs and such are super cheap compared to that era, but owning a house is nearly out of reach for a family living off $62k/year. In 1955 and 1965 it was completely normal for a single-income family to own a home with a yard, etc.
I don't think that owning a house is nearly out of reach for a family making $62k/yr. Standard advice is that one can afford a house costing 2.25 times one's annual income. That means the median family can afford a $140k house.
Briefly checking my city, paying $140k for a house in my city is enough for a 3 bedroom detached house with a large yard, in the suburbs, with a 15 minute drive to downtown.
What the heck where do you live? $140k gets you a beat up garage everywhere I’ve ever checked.
The 2.25 advice is interesting. By that logic me and my girl can afford $750k which juuuust about starts to get you in the starter fixerupper homes here in SF. But we can’t afford the downpayment. And to make it worth buying, we’d have to stay there for 10+ years and then suddenly a starter 1.5bedroom becomes a little small when you consider what usually happens to couples in our age group on a 10 year timeline.
The 2.25 thing seems like it's very conservative. The general advice is that the most you should spend on rent in a given year is 30% of your salary, but let's bring it down to 20% to be conservative. Let's say we get a shitty mortgage rate of 4% over 30 years. Assuming your income won't change at all over the course of the 30 year mortgage and spending the equivalent of 30% of your salary per year, you end up spending 9 times your income on the house. Going off of Google's mortgage calculator, the cost of the mortgage is about 172% the cost of the loan for 30 yr/4% so that means you could buy a house that's ~5.25x your income to be equivalent to the money spent on rent.
Obviously this is ignoring a lot of things like HOA fees and taxes, but if even if you're mortgage payment is 50% of your monthly housing expenses you could still pay for something that's more than 2.25x your salary.
I believe that the 2.25x estimate comes from a time where a mortgage rate of 4% would not be considered shitty but rather impossibly low. Lower interest rates have increased the home value that people can afford for the same monthly payment, and thus has been also a factor in driving up home prices.
The 50s and 60s were a golden age of middle class prosperity, because median family income went from $29K to $42K with only one adult working. If you were living through it, it must have been amazing.
I mean, sure, but I'm pretty sure the median household income today is from 2 working adults, where 1955 and 1965 are a single working adult.
There's also purchasing power, which isn't touched on here. Yes, TVs and such are super cheap compared to that era, but owning a house is nearly out of reach for a family living off $62k/year. In 1955 and 1965 it was completely normal for a single-income family to own a home with a yard, etc.