Many home buyers, investors, and real estate agents have seen significant home price changes over the past several years and decades. To better understand the property values today in 2018, the historical price changes must be reviewed in depth to compare how much the property values have increased between the 20th and 21st centuries. What may shock many readers is how much that home prices have escalated between 1940 and 2018. California, specifically, has far outpaced the rest of the nation due to the demand for prime properties far exceeding the available supply as noted below.
20th Century Price Trends
Median-priced homes quickly rose in value after the end of the The Great Depression (1929 – 1939) and the start of the growth of suburbia in places that later expanded out towards western states like California partly thanks to the expansion of FHA and VA home mortgage loan options that allowed 0% to 3.5% down 
payments, improved car access by way of national highway systems, the ending of World War II (September 1939 – September 1945), and a booming U.S. economy. The economic and housing boom was especially between the later years in the 1940’s up until the year 2000 in spite of several down years related to wars, inflation, and the booming and busting oil market cycles that happened quite often in the 1970’s decade.
Between 1940 and December 31st, 1999, the national median home values that were adjusted for inflation nearly quadrupled over that 60-year time period. In 1940, the median home price for the nation was $30,600. By 2000, national median home values rose to $119,600. U.S. Homeowners in the 1970’s decade experienced the fastest percentage increase of home prices (43%) and the slowest rate of growth (8.2%) in the very next decade in the 1980’s.
Source: https://www.census.gov/newsroom/press-releases/2023/2020-census-demographic-profile-and-dhc.html
Real Estate is an Inflation Hedge
Real estate is described as an exceptional hedge against inflation in that it typically rises at least as high as the annual reported national inflation rates somewhat like a floating buoy with the rising tide. Let’s take a closer look below at the median home value for existing single-family homes using both inflation-adjusted dollars and unadjusted dollars that were based upon the actual prices paid during the listed years for California and the United States in the 20th century and the very start of the 21st century (1940 – 2000):
Home Prices Adjusted for Inflation
United States’ Median Home Price (Adjusted to 2000 dollars*)
| 2000 $119,600 |
1990 $101,100 |
1980 $93,400 |
1970 $65,300 |
1960 $58,600 |
1950 $44,600 |
1940 $30,600 |
California’s Median Home Price (Adjusted to 2000 dollars)
| 2000 $249,800 |
1990 $211,500 |
1980 $167,300 |
1970 $88,700 |
1960 $74,400 |
1950 $57,900 |
1940 $36,700 |
* Source: U.S. Census Bureau
https://www.census.gov/hhes/www/housing/census/historic/values.html
Home Prices Not Adjusted for Inflation
United States’ Median Home Price (Actual unadjusted prices at the time)
| 2000 $119,600 |
1990 $79,100 |
1980 $47,200 |
1970 $17,000 |
1960 $11,900 |
1950 $7,354 |
1940 $2,938 |
California’s Median Home Price (Actual prices)
| 2000 $211,500 |
1990 $195,500 |
1980 $84,500 |
1970 $23,100 |
1960 $15,100 |
1950 $9,564 |
1940 $3,527 |
Median Sales Prices of New Homes Sold in the United States
Listed below are the median home prices across the nation between 1963 and 2018. Please note that these median home sales prices are related to brand new homes that are usually priced higher than older existing homes. When the median prices fall between one year and the next, they are highlighted in bold to show the years when there was price deflation. The very first year when the median home price for a new home fell was in January 1982 after several years of very high interest rates as partly noted by the U.S. Prime Rate reaching 21.5% in both December 1980 and January 1981.
| Month-Year
January 1963 January 1964 January 1965 January 1966 January 1967 January 1968 January 1969 January 1970 January 1971 January 1972 January 1973 January 1974 January 1975 January 1976 January 1977 January 1978 January 1979 January 1980 January 1981 January 1982 January 1983 January 1984 January 1985 January 1986 January 1987 January 1988 January 1989 January 1990 January 1991 January 1992 January 1993 January 1994 January 1995 January 1996 January 1997 January 1998 January 1999 January 2000 January 2001 January 2002 January 2003 January 2004 January 2005 January 2006 January 2007 January 2008 January 2009 January 2010 January 2011 January 2012 January 2013 January 2014 January 2015 January 2016 January 2017 January 2018 |
Median Home Price $17,200 $17,800 $20,700 $21,200 $22,200 $23,400 $24,600 $23,600 $23,900 $24,700 $29,900 $34,200 $37,200 $41,600 $45,500 $52,300 $60,300 $62,900 $67,600 $66,200 $73,500 $76,200 $82,500 $86,600 $98,500 $119,000 $113,000 $125,000 $117,900 $120,000 $118,000 $126,000 $127,900 $131,900 $145,000 $148,000 $153,100 $163,500 $171,300 $187,100 $181,700 $209,500 $223,100 $244,900 254,400 $232,400 $208,600 $218,200 $240,100 $221,700 $251,500 $269,800 $292,000 $288,400 $315,200 $329,600
|
Source: U.S. Census Bureau https://www.census.gov/construction/nrs/pdf/uspricemon.pdf
While the home price gains were quite impressive in California and the rest of the nation in most of the 20th century, they would later be far surpassed by the compounded price gains after we entered the 21st century. The higher the sales prices, the higher the sales commission fees collected by real estate agents and brokers. Many California real estate agents would later earn hundreds of thousands to millions of dollars each year in commission fees parallel with the record-setting price gains that were jump started with the tremendous price gains in the 20th century.
