In 1980, the average cost of a new home in the United States was approximately $76,400, while the median sales price was lower, often cited around $64,600 to $68,000. While specific prices for a 3-bedroom home varied by location and size, they generally fell within this range, representing a period with high mortgage interest rates, often near 19%.
1970. The '70s showed an overall increase of nearly $50,000 from the beginning of the decade to the end, per FRED calculations. Between 1970 and 1975, the average cost of a home jumped from $27,000 to $40,900 — which would be $213,457.27 and $233,195.38 in 2024, respectively.
In 1960, the average cost of a 3-bedroom house in the United States was approximately $12,700. This price can vary significantly based on location, amenities, and other factors, but it provides a general idea of what homebuyers faced during that era.
Home Prices
The average home price today is $416,100 and in 1983 it was $74,900. Using the Bureau of Labor Statistics Inflation Calculator, the $416,100 figure from today would be equal to $136,471 in 1983.
The 80s was an era of creative home financing
Two of the biggest strategies that you may have also heard of currently include assumable loans and mortgage rate buy-downs. Assumable loans helped to keep the real estate market plugging along during the early 80s when mortgage rates climbed higher than we have ever seen.
The Census Bureau's online inflation calculator says that $3,400 in 1955 is the equivalent of $38,655 in pre-tax income today. The $7,900 cost of that three-bedroom house would be just over $89,800 in inflation-adjusted dollars. The average American house is not $89,800 today.
In 1980 the median price per square foot of a new home was $162 and in 2024 it was $195.9. That is a 21% real increase. Homes are bigger today and that adds expenses.
As a result of tighter monetary policy and higher inflation, mortgage rates increased to a peak of 18 percent in 1981. As mortgage rates reached levels unseen before or since, homes became significantly less affordable and home sales fell. By October 1982, inflation had fallen to 5 percent.
In 1980, buyers averaged 28% down, a hefty $18,100 on a $64,600 home to offset rate risks. First-time buyers today have a median down payment of just 9% ($37,600 on $417,400), thanks to low-down-payment loans like FHA.
Home prices have grown far faster than people's income. One figure that measures affordability for buyers, house price-to-income ratio, has nearly doubled since 1980, MoneyGeek reports. The states with the highest home price-to-income ratios won't surprise anybody: Hawaii and California.
Houses weren't always this expensive. In 1940, the median home value in the U.S. was just $2,938. In 1980, it was $47,200, and by 2000, it had risen to $119,600. Even adjusted for inflation, the median home price in 1940 would only have been $30,600 in 2000 dollars, according to data from the U.S. Census.
Surge in Monthly Payments: The average mortgage payment has skyrocketed, up 111.1% since pre-pandemic levels, reaching around $1,900. Future Price Predictions: By 2050, experts anticipate that the average home price could reach between $600,000 and $700,000 in the United States.
Minimum wage would need to be $43/hour today to buy a house like a minimum-wage worker could in the 1950s. In the 1950s, the median price of a home in the United States was about $8,450, with typical three-bedroom homes ranging from $7,000 to $12,000 depending on the region and materials used.
Even if we were to just look at changes in income based on inflation, American families are doing much better. Adjusting for inflation, $21,020 in 1980 is equivalent to roughly $74,648 in 2022.
People today have about 63% more purchasing power than they did in 1973. However, the cost of necessities — such as housing and education — has skyrocketed over that time. Home prices have risen about 1,045% since 1973.
In the 1980s, the typical homebuyer was in their early 30s.
In 1980, the median monthly rent, according to iPropertyManagement, was $243. By 1985, it had risen to $432. For comparison, the nationwide average monthly rent in August 2022 was $1,388.
In the 1980s a typical house price was around 3x annual salary, now its over 6x (and over 10x in some parts of the country). It is clearly more difficult for first timers to buy, evidenced by the fact the average age of first ownership has risen substantially. What matters most to people is what's changing.