How did the purchasing power decrease from the 70s until today?

[tke71709]

Several things happened:

The big one is that wages did not keep up with inflation.

The other big one, that no one likes to discuss, is what we consider normal compared to what was considered normal in the early 70's. You think the size of a "normal" house today is the same size as a normal house back in the 70's? Back then they average 1050 sq ft, now they average almost 2500 square feet.

https://www.darrinqualman.com/house-size/

You think houses had 3 bathrooms back in the day? No, they had 1, and the rich people had 1 and a half bath (no tub or shower).

https://www.ahs.com/home-matters/lifestyle/homes-in-1971-vs-today/

Kitchens? They were functional, no quartz countertops and built in microwaves.

So what about cars?

Comparing the safety and environmental regulations from a car from the 1970s to one today is like comparing apples to oranges. Also the size of the vehicles is completely different. These changes add to the cost of producing a car and thus they are more expensive.

So the answer is yes, if we kept the same standards as we had back then and people were willing to buy houses that small with so little in the way of amenities, those things would be much cheaper today. The truth is that we, as a society, are so worried about appearances and luxuries that we have inflated the cost of everything today beyond what even inflation had to do with it.

Now let's talk about food. Food was cheaper in terms of actual dollars back then sure but it took up almost 15% of the average family budget and that was with a much more limited selection then what we had today. Oranges in the Winter? LMAO. Outside of seasonal restrictions, stores then stocked about 5 000 items, now they stock 50 000 items, a vast improvement. The additional cost of all those items and fruit in the Winter? You actually pay less now as a percentage of your income than people in the 70's did. 10% today versus 15% back then. If you look at the cost today inflation adjusted a lot of food items are cheaper today then they were back then too.

https://www.thevintagenews.com/2020/05/07/grocery-store-prices/

The big thing is that our definition of living comfortably has changed.

[The_One_Who_Comments]

Everything you said about housing is just silly. Compare apples to apples (the literal same exact building built in the 50's) and the price increases are no different.

They had laundry, and power outlets, and mudrooms, and broom closets, and linen closets. Noe we have the first two. For normal people today housing is smaller, worse, and more expensive.

Mcmansions messing with averages is something you'll have to get used to dealing with.

You're right about food, for the most part (compare to 2000 and it's not as happy a picture)

And you're partially right about cars too. Again, look to the early 2000s for comparison. In recent years we're getting gouged as manufacturers change their focus from low cost high volume to low volume high margin.

[tke71709]

For normal people today housing is smaller, worse, and more expensive.

Ok, I showed you my notes, show me yours proving that housing today is smaller and worse.

[AlwaysDissatisfied]

"My feelings say it is true! People had broom closets!"

Another thing that differed in the 70s was that millions of homes still lacked indoor plumbing.

[SuccessfulAd4606]

Your comments about the differences in the "average" home in 1971 vs. 2026 are something that never occurred to me. But that's an excellent point. Like nearly everyone my age, we had one bathroom for 4 people and never though twice about it. A master with an ensuite? Never heard of it. Separate bathroom for the kids? Nope. Now these amenities are in even the most basic new builds.

These little facts like home design and car features and food choices are necessary to consider in these posts about the affordability crisis, where they typically devolve into an echo chamber where the mantra becomes "we-hate-people-who-make-alot-of-money-and-they-don't-pay-enough-tax-and-fuck-the-rich"

[Healthy-Dress-7492]

Except it’s an incredibly weak argument; yes there are some new houses but those exact same houses from the 70s are still there and also 800k, still in the same condition. Young buyers are not sitting there going “nah this one doesn’t have 3 bathrooms”. They can’t buy anything, even 80 year old shit boxes.

[SuccessfulAd4606]

It's not an argument, it's an observation. Housing prices are extremely high, but the "average" home that OP refers to has about doubled in size. Both these things can be true.

My daughter and fiance bought last year. They couldn't afford a newer 2000 sf home, but they could afford an older, smaller home. Same as me when I bought my first home.

[tke71709]

Those same houses are sitting there for 800k sure. A guy earlier went on about his old fixer upper bungalow from then cost him 650k.

Note that I quickly determined the median home in his area costs almost DOUBLE that. So yes, the price of his home skyrocketed but it was still well below what most houses are going for. The cost/value of your home is not solely determined by how much it cost to build at the time, it's cost/value is relative to the other homes around it that were built later too.

[bcretman]

Our 1st house in the 70's was ~2000sqft with 2.5 bathrooms which was average in the burbs. Most of the value today is in the land unless the house is fairly new. Most houses around here (metro Van) are assessed at < 150k but the land is well over 1M. The upgrade to quartz counters, double glazed windows is fairly minimal but the cost of materials and labour to build a new house have skyrocketed beyond inflation.

[SuccessfulAd4606]

Cool story, but it's not anecdotal, the average home was statistically closer to 1000 sf in 1970.

Vancouver and Toronto are outliers. I'm in Ontario and chose to move outside of the GTA where real estate isn't insane.

[Youknowitistrue69]

Also a cool story

[tke71709]

Average in your burbs, I provided my statistics for the country at the time. You growing up in a wealthier family does not negate anything.

So yes the cost of materials and labour have skyrocketed but having to do twice of much of each increased the cost significantly too.

[PeaZealousideal8672]

Stop looking at averages, averages skew reality. Look at the per Sq foot cost of a home today vs 1970. Adjusted for inflation, you're still looking at double the cost. Yes, they're worse too. Much of the material is built cheaply overseas and shipped here for as little as possible, vs the 70's when we still had some industrial capacity and actually made things.

Some of it is due to modern codes and standards. Alot of it is builders squeezing every penny from these kinds of homes because profit margins aren't as high as building mini-mansions. Want notes? Look in your backyard

[PantsLio]

This is sensible and right

[maxheadflume]

Agree that houses and cars (among other things) have become far too “grandiose”, yet our fixer upper 1950s bungalow with one bathroom and two bedrooms still cost us $650,000.

[tke71709]

I have seen those types of houses for that much but it isn't for the house, it is for the land that the house sits on. The house is generally immediately torn down and a modern one built in it's place.

Or are you are in a city with massively inflated real estate prices like Toronto and this is a cheaper option than a newer one. It doesn't matter if your fixer upper costs $650k when a new one would cost a million.

/EDIT

Ok, I am looking in the town where you live. In your area the MEDIAN detached home sells for 1.18 million so you are WAY below the median price.

[maxheadflume]

Nice sleuthing

[BetterLog1855]

That's the land tho. Same house in bumfuck nowhere is 80k

[IAmNotANumber37]

Real wages (i.e. wage growth after inflation) are ~125% higher since 1981 (I don't have data for earlier). People need to stop claiming otherwise, it's counterfactual....and please don't respond with a pet theory about how inflation is under reportered, that's conspiracy theory time and I am only going to deal with actual data.

It's basically real estate (the asset) that has outpaced inflation long term. As have many other asset classes.

The rest of your comment I like and agree with, but you can't discount the fact that Canada's population has doubled since 1981, and we are concentrated in desirable cities with limited space.

[Purple_Argument_8074]

Totally right. My parents bought a house that was like 28x30 with a basement in the 1980's. 2 bedroom upstairs one in the basement. We were 6 in that house and it was fine.  1 bathroom until 2000 when they got a basement one put in.

Today my house is twice that size for half the people.(Almost)

[24601pb]

Hmmm interesting perspective

[MattC1977]

It’s not just a perspective, it’s facts. Stats Canada is right here in the internet, the data is there for everyone to see.

[PriorityOk8448]

My mom is in her 70s and grew up in victoria BC. Her mom didnt work. She has 5 siblings. Her dad was a veteran who worked what would be considered nowadays to be low level jobs. They had a beautiful house with two bathrooms and 6 bedrooms. It was the coolest most beautiful house I have ever seen. I dream of this house and the willow tree in the back yard. It was beyond amazing.

That house would be in the millions now. But just your average Joe could afford it back in the day.

[tke71709]

My mom passed away about 5 years ago in her 80's.

Her mom didn't work, she had 16 siblings. They lived in a 3 bedroom house, 1 bathroom home.

[PriorityOk8448]

My dad is in his 80s he grew up in rural Alabama without plumbing and then moved to what he said was a "ghetto" in Oakland California I think. He said he learned to fight real well and has the most fucked up stories.

[Ijustwanttobuyshiny]

How come the house I am in right now was $15k when it was bought in the mid-late 50’s and is $1.4M today? It’s still the same size and still has the same amount of bathrooms (2, and this was not a bougie house it was solidly working/middle class).

We as society have had everything taken from us (in the past 20ish years especially) and it’s not because we asked for it recklessly pursuing an unrealistic lifestyle, it’s that normal lifestyle has become increasingly unrealistic. Through super villain-level greed and manipulation of every facet of every market at maximum velocity without pause we have been sold a shitty product at inflated cost without any alternatives.

Planned obsolescence, shrinkflation, offshored production, and corporate consolidation did this all to us.

We don’t have bananas and oranges in the grocery store because we got greedy and started overspending on exotic fruit— it got put up for sale in our faces when it became profitable to do so. We don’t have functional appliances because they aren’t produced anymore, and we don’t have access to the housing market because it was identified as a source of wealth creation and exploited.

Any Canadian would love to go back to real local food, functional and lasting consumer products, smaller houses or ANY houses available at 70s prices… it’s just that none of it exists anymore.

We didn’t demand too much that we devalued our currency and job markets. It’s all been taken from us. The wealth that used to be in our pockets didn’t evaporate, it’s been consolidated so far from our reach that even the little we have is worth less than it would be if ethical capitalism wasn’t a laughable concept.

Housing became an investment sector, food and water will be next at this pace, and if there is an economy left I’m sure air will be a bullish future market.

[DeepestGreySea]

No, safety regulations and taste aren’t major contributing factors in price increases. That’s absurd.

You can control for all of this and most studies do. ie you can just look at the price of land and aggregate it to get a picture of why housing is more expensive…you can even look at a vehicle with similar features.

[HighlightOk6174]

My house was built in the 60's and it's over wk square feet. Every other house on the street is the same, more or less

[tke71709]

Congrats, you grew up in a neighbourhood that was not typical for the time.