Here's the history of US inflation in a nutshell.*

Lyndon Johnson wanted to have a Great Society and have a quick win in Vietnam. He thought that a big buildup could give the US a knockout blow, but it turned into an expensive quagmire. The US was dropping a dozen Hiroshimas worth of bombs on the jungle every week. This meant that US steel mills were working 24/7 and not getting updated. LBJ is printing money to pay for this, because he doesn't want to raise taxes.

Nixon comes in in 1969, promising to end the war. Instead he triples down on the policy of printing money and overworking the factories. Then the Arab Oil Boycott hits. Prices of everything jumps. Many small manufacturing businesses either go broke or relocate to non-Union states. All those fancy Manhattan lofts you see today started as factory buildings.

And while the US steel mills were running day and night, Japan and Germany couldn't get American steel, so they started building their own mills. Mills that needed a lot less power than the aging US mills. Suddenly Americans were willing to buy a tiny Japanese car instead of a Detroit model that got 6 mile to a gallon.

Jimmy Carter gets one term as President before the Iran Hostage Crisis ruins him. Carter hires Paul Volker to run the Fed and save the economy. Volker's plan works, but it's Ronald Reagan who gets the credit. Ronnie kept Volker in place.

Reagan has his own version of Nixon's print and spend policy. Tax cuts for the rich and bank deregulation create an artificial boom in the 1980s that lead to a stock market 'correction' in 1987.

When Nixon came into office, 'middle class' was one Union job paying for a family of four and $1 million was considered a vast fortune that could buy a dozen houses.

By the time Bush Sr. was done, 'middle class' was two incomes to support the household, and $1 million was what a rich guy paid for a party.

*this is a very brief description, leaving out many details.

Nothing broke, everything is working as intended

Income growth broke as it hasn't followed economic growth since the 70s.

The 1974 Tax Code re-write, that baked Trickle Down Economics into our tax code, created the Oligarch class, giving them the disposable income to manipulate political policy to their further benefit.

The Rand Corp issued a report on income inequality, and the situation is far worse than most people think.

Chart

The median salary of $43K in 1975 has increased to only $50K today, while they would have been making $92K if the tax code hadn't been steadily re-written to enrich the wealthy at the cost of the middle class and poor.

In that same time period, the mean income for the top 1% went from $289K to $1.384 million, while they would have been making $630K under the old tax codes.

Thats a 17.4% increase in the lower median, and an increase of 321.6% in the 1% median. Clearly there has been an upwards distribution of wealth at the expense of the middle class since the tax codes started to be re-written in 1974 to favor the top economic tier.

Read more about it :

New York Mag: http://nymag.com/intelligencer/amp/2020/09/rand-study-how-high-is-inequality-us.html

Fast Money: https://www.fastcompany.com/90550015/we-were-shocked-rand-study-uncovers-massive-income-shift-to-the-top-1

Private businesses being allowed to buy up the market to artificially increase prices and scarcity. How else can you ensure real estate is a solid investment stream?

What broke is they allowed housing to be a commodity allowing speculators to bid on.

Interesting claim. Let's look into it.

Average home price in 1970: $25k I found a few different figures on this one, and averaged them out.

$25k 1970 dollars in 2026 per CPI: $220,251 https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=25000&year1=197001&year2=202604

not necessary, but gives context: Average (not median) home price today: $502k https://fred.stlouisfed.org/series/MSPUS

Median home price today: $410k https://fred.stlouisfed.org/series/MSPUS

"The median money income of all families in 1970 was about $9,870" https://www.census.gov/library/publications/1971/demo/p60-80.html

Median family income in 2024 (most recent year reported): $105,800 [note: does anyone believe this? FRED is claiming median family income went up 45% in the past decade and I find that EXTRAORDINARILY suspect. Few people get COLA over 3% and many getting fuckall.] https://fred.stlouisfed.org/series/MEFAINUSA646N

roughly a 10.7X increase

My best guess is that Mr. Brooks, using slightly different numbers (sources vary, exact years, etc...), to arrive at: 1970 Home Price + Flat Income Gains = $138,000. This is not great methodology, as growth is looked at in percentages for a reason. To illustrate, suppose instead of a house we were looking at candy bars. Let's say in 1970 a candy bar was a dime and today it's $2. Grafting raw wage gains onto candy bars, we're saving over $80k on each candy bar!!! Oh wait, that's silly. Let's stick with percentages.

Using the official wage numbers, we arrive at "the average home today would be $267,500". This is more accurate yet still a massive departure from where we are today.

So... what actually broke?

There are several explanations for this divergence.

The Good: Houses today are bigger and have better construction standards. Please, before you start typing a survivorship bias based claim about your house from 1905 that's still in great shape today, read up on survivorship bias. Yes, there are modern builders who do shoddy work (we've all seen the Youtube videos), but overall a house built to code in 2026 is significantly more advanced. A fair amount of the cost increase can be captured here.

The Bad: Rent seeking. Figurative and literally. Somehow someone was like "hey, I'm going to get rich by making a basic necessity worse" and nobody beat them within an inch of their life to discourage others. Rookie mistake by our society.

The Ugly: Official numbers are suspect at best. This was true before 2025 and whoa boy is it true now. Inflation is chronically under-reported BY DESIGN. That means actual inflation is driving up the cost of houses and cans of bean and things, while reported inflation is being used to determine your pay raise (that is, if you even get one). This divergence that started in the 90s is hitting critical mass here in the roaring 20s and we're probably fucked as I haven't heard anyone in a position of power even recognize this problem, let alone suggest how to fix it.

What actually broke?

People figured out they could buy more than one house and rent it to other people, paired with a housing shortage partially due to people/companies owning all the houses, paired with technology to allow you to rent your houses out for a few days here and there to make income.

We allowed house ownership to become entangled with entrepreneurship.

"until we reestablish old-school legit full blown slavery (which we will), we have to make do with debt slavery"

-oligarch fascists

Housing can't be affordable and be a good investment.

https://web.archive.org/web/20210130004720/https://cityobservatory.org/housing-cant-be-affordable_and_be-a-good-investment/

The wealthy aren't paying their fair share. They pay way less than they should in taxes and keep accumulating wealth and buying up shit, which of course is coming from us. That then increases prices because more normal people need it.

!twnw@fedia.io #TaxWealth

Nothing broke.

This is capitalism working as intended.

Homes as equity.

Once they were considered investments, then they were subject to the "Line Must Go Up" tenet of capitalism.

Capitalism

Accountability

this happened and we never recovered: https://en.wikipedia.org/wiki/Subprime_mortgage_crisis

According to the alleged dynamics of capitalism, housing prices should be somewhat flat. Build houses that are too big and expensive? Demand is down for that market subset, gotta drop your prices or stop making such but houses. Housing supply is low? Prices go up, so companies will build more housing to make money off of that, increasing supply and stabilizing prices!

So the dynamics are not working like that. Now of course real estate has a "natural monopoly" aspect, certain land is less valuable because it is just too hard to get to and from relative to what people need to do: work, eat, go to school. So land rents are higher in some places more than others because of this. Am economist might call this a distortion.

But there is a much more important aspect in the US and similar economies, and that is financialization. Some comments here say prices are very high because houses are treated as an investment. That is true, but also incomplete, and it might make you wrongly think that it is individual homeowners saying, "this house will be worth more later so I will buy it". This is not enough! The financialization is by the bank that sells you a mortgage, that takes a nice percentage of your money in exchange. They can then make your house into a form of equity that can be seized later as needed if you're not profitable enough, which they carefully calculate to decide on your initial interest rate. And then they can gamble on that equity on the market. That equity is only worth something if the actual house has value and it has value because they will still loan you that amount on a new house. So an individual home buyer might buy based on the ability to be financed, sure, and the expectation that it will be worth it. But this is only possible because the mortgage lender themselves sees it as profitable for them to do so. If those high mortgages were not available, nobody could buy the expensive houses, land values would plummet, and so would housing prices, etc. of course because the dynamic is capitalist, this would involve a massive disposession and immense suffering if done at their hands and potentially threaten mass organizing and a threat to real estate profits, so whenever that threatens to happen (like 2008) the state keeps finance (and therefore real estate) afloat with free money.

So why aren't more and lower cost homes built, especially in the locations that need them? They bring down property values that have been gambled on by huge institutions. Only luxury apartments can be built, not affordable housing units. And real estate basically owns your local government, and every politician above that level is still beholden to them. Ultimately they can crash the entire "economy" if needed.

Nothing broke. It's working exactly as intended.

There have always been two distinct economies.

• There is their economy (meaning the billionaires economy of venture capital, real estate investment firms, speculative markets, etc...) It's a market that exists on paper only. Theoretical billionaires with assets instead of bank accounts, capital instead of paycheques. Money isn't a real concept in that economy, it's simply a measure of profit and loss. It's just a score keeping device and something used to leverage power.

• Then there is our economy. (meaning the rest of us, who get a paycheque, spend that paycheque, etc...) Maybe we'd be able to put something aside for retirement or college for the kids. . Money itself has a real, tangible impact in our lives. It's not theoretical.

Maybe we have enough to play in the paddling pool of the speculation market, telling ourselves that "we're shareholders!" like our 10 shares means squat against the 10,000 shares owned by the investment firms and LLCs run by the billionaires. Employers like to do things like offering you stock options, selling it as "you'll be an owner and have a say in the company". Yeah...no...you'll have a piece of paper and a sense of self-importance because you "dabble in stocks".

The idea being that if we invest hard enough, and risk enough, we'll make enough to jump us from one economy into the other. But we won't. That's the lie they tell to keep us mollified.

Because the truth is that their economy, only works at the expense of our economy. Profit in their economy, only comes from loss in ours. A corporation can't make more profit without taking it from somewhere. And that somewhere invariably is us; our health benefits, our cost of living, the quality of the products that we use, our lack of raises, etc...

It’s the end of the monopoly game

Houses should be investments... in the same sense that a good, durable pair of shoes is an investment.

In a well designed system, the value of property should stay pretty flat over time, and the value of a structure built on that property should slowly go down over time as wear and tear sets in.

It's ridiculous that it makes sense to buy more home than you need, and to hold onto a house longer than you need it because it's one of the best and safest money-earning investments you can make. It's especially annoying as someone in a position to make that investment gets to live inside their investment and enjoy it even as it appreciates in value.

Nothing else works that way. Can you imagine if you bought a classic car and drove it on the road as a daily driver and it went up in value? Or, if you bought a rare Magic the Gathering card, used it in your regular deck, and somehow it only became more valuable?

The average home

I mean, no offense to the OP, but this is a constant game of bullshit in a country as large and sprawling as the United States. The problem with housing prices isn't simply "median price", it's "proximity to the work site" and "proximity to public services" and "size sufficient to host my whole family". You can show me a house for $80k out in the de-industrialized Midwest or the boonies of rural Wyoming. I won't buy it, because I have nowhere to commute to work or send my son to school or a grocery store to shop at or potable water that won't kill me. You can show me a high rise in walking distance to everything I need, but if it's $1.5M I can't afford it.

If it's $100k for one of a hundred vacant rotted out homes in the slum and $300k for a single unsold 70 year old ranch house in the burbs and $500k for one of the fifty newly built 600 ft condos in city, taking the "average price" doesn't answer the question "Where am I going to live?"

Among many other things, people now vote in local elections according to “what will be good for my property value” and this often (usually) doesn’t mean making more affordable housing available. It’s a very specific case of NIMBYism. Luxury condo building with 15% affordable units? Not where it will affect my property value!

Multiple things broke and anyone, including and especially politicians, trying to sell you on a single narrative is a lying POS.

Capitalism is working as intended.