| Wages really do buy less house than 100 years ago. This would have been about 1920 when the Sears kit houses were invented. Look at this: http://eastsidehill.com/news/wp-content/uploads/2010/04/1927... The inflation calculator here: 32,424.83 in today's dollars for a respectable, quality 8 room house. Sure it doesn't include land or labour but there's no way an 8 room house costs 32k today. Today that would buy you a Tiny House on the low end of that market. In my opinion, and I know we are far richer than our great-grandparents, but anybody arguing we're quantitatively richer than our parents has a long row to hoe. If this is progress it sure is lumpy. As Peter Thiel says the most likely explanation is we've had an nearly completely unacknowledged (by Western intelligentsia) stagnation technologically. |
Economists know that GDP measures are skewed by the fact that “a car is not a car” — that is, a new car today is much more than a new car from 30 years ago. It is safer and more comfortable, and consumers who pay the same amount in real dollars for a new car today are better off than consumers who bought a new car in years past.
So the “house” from the Sears catalog isn’t likely comparable to a house today with the same number of rooms. For example, the size of bedrooms, bathrooms, kitchens, closets, and garages has increased greatly in the last 100 years. New homes are more energy efficient and have safer wiring. Does this close the gap with a $32k house? Not in Silicon Valley, but there are parts of the country where the house (excluding the land, which Sears didn’t include either) is worth around $50k.