The “affordability crisis” is all over the news lately. It figures into predictions of how the next elections are going to turn out. It comes up on TV and radio talk shows, podcasts, and friendly—or not so friendly—conversations among friends and family members. Millions of Americans believe pretty much everything is unaffordable today—from burritos to houses and everything in between. Are they?
Measured in nominal dollars, that is, without adjusting for inflation over time, hardly anything is as “affordable” now as it was 20, 40, 60, or 80 years ago. But measured in inflation-adjusted dollars, almost everything is more “affordable” now. More importantly, when measured in hours of work needed to earn the money to purchase it, essentially everything is more affordable now than at any time in the past. Several mistakes lead people to think otherwise—to think housing, autos, food, clothing, etc., are less affordable now than before. Consider a few examples, drawn mostly from housing, which is often cited as being especially “unaffordable” today.
First, they forget to index for inflation. The nominal price today may be higher, but the inflation-adjusted price is often lower; if it’s still somewhat higher, it’s not nearly as much higher as people think. There are differences between a house long ago and one today that explain much, if not all, of the price difference.
The house my parents bought in a neighborhood outside the small town of Owego, New York, in 1958 for $16,000 is now valued at $274,900 by Zillow. When adjusted for inflation, this total is equivalent to about $24,172 in 1958 dollars. This sounds as if the house has become less affordable. But that conclusion is premature, and there are very good reasons to reject it.
Second, we need to be sure we’re comparing apples to apples over time. What do I mean by that?
Well, to begin with, in 1958, that house had no air conditioning (central or otherwise), no microwave, no modern refrigerator, no washer and dryer (I remember!), no Internet, no Wifi, no automatic garage door opener, and other aspects of it were much poorer in quality than today. Those items benefit the occupants year after year, not just in the year they purchase the house. So, their values must generally be multiplied by about 10 to account for them in the house’s purchase price. If they could have been had at all in 1958, and if their combined purchase cost (in 2025 dollars) had been around $5,000, then multiplied by 10, they’d have been worth fifty thousand 2025 dollars. So, it’s pretty likely the inflation-adjusted price of the house as it was sold in 1958, without all those things, would have been higher than the inflation-adjusted price without those things today.
Now let’s move from that specific house to housing in general, and to household occupancy, so we’re looking at the price of housing space per person. The average price of a new single-family home in the US in 1950, adjusted for inflation, was about $150,000, compared with about $527,000 in 2025, which is 3.5 times as much. It sure sounds like housing’s a lot less affordable now than 75 years ago.
But 75 years ago, the average size of a single-family home in the US in 1950 was only 983 square feet, compared with 2,405 in 2025. The average household occupancy in 1950 was about 3.5 persons, compared with 2.5 in 2025. So, square footage per person in 2025 was about 3.6 times as much as in 1950—but 2025’s price was only 3.5 times 1950’s price.
Let me reword that a little to make it clearer: Average space per occupant in 2025 was about 3.6 times what it was in 1950, while average price per house was about 3.5 times as much. So, it’s already clear that, based on space per person, today’s housing is less expensive, after adjusting for inflation, than housing 75 years ago.
But that’s not all. Now let’s look at just a few examples of amenities of the average new single-family home in 1950 versus 2025:
- Air conditioning (at all—whether window or central): less than half a percent in 1950, but about 98% in 2025.
- Indoor plumbing: about 71–75% in 1950, but 100% in 2025.
- Electric clothes washer: about 60% in 1950, but about 85–90% in 2025.
- Electric or gas clothes dryer: under 5% in 1950, but about 81% in 2025.
- Electric full-size refrigerator/freezer: about 80% in 1950, but about 99.6% in 2025.
Now we come to three more amenities that either didn’t exist in 1950 or hardly did:
- Specifically in newly built housing, energy-efficient double-paned or gas-filled windows (which greatly reduce energy costs, making the housing cheaper over time): about 0% in 1950, but about 100% from 2009 onward.
- Microwave oven: 0% in 1950, but about 99% in 2025.
- Internet service: 0% in 1950, but about 95% in 2025.
One could make similar comparisons for other items. For example, cars are far more comfortable, not just because of better seating but also because of air conditioning. They’re also much safer, get much better gas mileage, and last much longer.
One other example: Flying from NY to LA round trip in 1950 on noisy propeller-driven aircraft with one or two intermediate stops each way—nonstops were almost nonexistent at the time—cost about $1,470 in 2025 dollars, or almost exactly three times the $493 it cost in 2025. The trip took about 10 to 12 hours each way in 1950, but about 6 hours in 2025, on quieter, jet aircraft.
So, after adjusting only for inflation and quantity, quality, and amenities, already it’s clear that many things—actually, the vast majority—are more affordable today than they were in decades past.
But much more important than the inflation-adjusted price—of housing or anything else—is the time price: the amount of time the average worker must work to earn the income necessary to purchase it.
As HumanProgress.org documents, the time price of housing itself (but without adjusting for quality and amenities) has remained about the same over the last 40 years—but the time price of the financing necessary for it has fallen considerably, meaning it’s easier for the average worker today to afford the same size home (again, without adjusting for quality and amenities) an average worker would have purchased 40 years ago.
In more general terms, drawing on data at HumanProgress.org, let me put it this way: Housing, new automobiles, air travel, clothing, and food and beverages are all more affordable today than in the past.
But two things are less affordable: education and medical care. Why? Education and medical care are heavily government-funded. Government funding raises demand well above what it would otherwise be, which necessarily raises prices.
Catch the irony here: Most people complaining about the “affordability crisis” blame capitalism, free enterprise, and corporations, not government. But it’s precisely where government is most involved that things are less affordable now than in the past, and it’s precisely where capitalism, free enterprise, and corporations are least restricted by government that things are more affordable now than in the past.
In short, the affordability crisis is almost entirely a matter of psychological perception, not objective, apples-to-apples comparisons. Most things are much more affordable today than in the past—and they’ll continue becoming so for the foreseeable future as the productivity of labor, resources, and capital continues to rise, boosted by increasing computerization and automation, especially artificial intelligence.
So, the next time you hear someone complain about the so-called “affordability crisis,” you know how to answer: It’s all in your head—or almost all, anyway.
This piece originally appeared at Independent.org and has been republished here with permission.
