I am not surprised by this, since it has long been obvious.
These “million dollar homes”, probably had an actual cost to the builder of perhaps $300k. With a $700k markup. This is just the high end of what is seen in the rest of the housing market.
People who bought homes in the early 1960s have had their homes increase in price by literally 10 times. Back then, a home that cost $100k would theoretically be “worth” $1m today.
But that is all illusion. Back then, that same home would have cost the home builder perhaps $95k to build. He would earn $5k.
It’s interesting that the total rate of inflation in the US economy from 1960 to today is something like 650%. In real terms, if something cost $1 in 1960, it costs $7.50 today.
So the real value of a $100k home in 1960, with ordinary inflation, should be about $750k today. So why does it have a price tag of $1m? Simple, because of speculation.
In the 1960s, if a bank was to give you a loan on your owned house, they would not assess its value at $100k, but the $95k that the house cost the builder to build. But at some point, the banks decided to loan and mortgage, not based on what the house was *worth*, but what the market said the price of the home should be.
And this was a bad idea. The banks thought they were being very crafty, to only sell mortgages based on the highly inflated price of properties, not its real value. They got greedy.
In the process, they managed to “create” money out of thin air, as least as far as their exposure to that mortgage went. Money that they are still responsible for.
It’s interesting that the total rate of inflation in the US economy from 1960 to today is something like 650%. In real terms, if something cost $1 in 1960, it costs $7.50 today.
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That is the official line but one hundred dollars a week in 1960 would support a family at a reasonable standard of living much more easily than seven hundred and fifty a week will now. You would have had a hard time hauling a hundred dollars worth of groceries in a pickup truck back then, now I can easily carry a hundred dollars worth into the house in one trip all by myself. My parents’ electric bill in 1960 was about seven dollars a month, gasoline averaged less than thirty cents a gallon. In truth a thousand dollars now is not equal to a hundred in 1960 if you compare the same lifestyle. Of course there are all kinds of things that didn’t exist then so you cannot really make an accurate comparison.
One thing to consider is that in 1960 a public high school graduate was better educated than almost any recipient of a Bachelor of Arts or Science in recent years and that education cost very little indeed back then. Most public high school graduates actually knew such complicated things as the difference between to, two and too, the difference between there, their, and they’re, the difference between loose and lose, the difference between it’s and its and that is not even the start of the vast knowledge that seems to have been lost since then. Many even understood the proper usage of I and me, something that seems to be beyond the ability of journalists today. Any one of them knew more about history and government than ninety nine percent of university graduates do now.