The 1970’s Changed our Culture, Economy, and Family

The 1970’s was a dramatic decade of change transitioning every aspect of our lives. We of course didn’t realize the shifts or nudges or 2 x 4’s immediately but most seems very apparent today.  

Since starting my blog in 2008, I have been saying that “As housing goes….so goes the economy”. This has been the pattern coming out of every recession since the first one that I experienced in early 1970. Not so much anymore.

I will try to present my views on how the 1970’s has affected housing and how housing will not be the answer to our economic woes.

The framework in which to review how we have changed as a country, we must first review the national policies and personal failures of our leaders. Our view of the federal government changed in the ‘70’s and has been going downhill ever since. The problem, we continue to send the same politicians to do the same job over and over again but expect different results…..we are insane!

Our trust disappeared in our leaders starting with Richard Nixon and then entered Carter which did not change our opinion. The stagflation era (could we be heading in this direction ---now?) under the Carter Administration put stress on the family and their finances. To buy a house, your interest rate was well over 15% and the only way to afford a home was to have 2-income earners.  (Source of quotes is unknown) 

"One important adaptation to the rising cost of housing is found in the increasing appearance of two-earner households... The second income provided more than 30% of total household income "

"First time buying households were even more dependent on a second income... It seems clear that the second income was made it possible to accommodate rising housing costs as a higher proportion of the total household income. Thus the growing importance of the second earner is a major factor in the continued affordability of home ownership”

2-income families increased about 20% since 1970. 50% of that increase occurred during the 1970’s. The balance of the shift occurred over the next 30-years.  

In a previous blog post, I outlined the median price of homes changes by decade. Do you know that the median price of a home in 1970 was $23,400!

In 1980, the median price of a home in the US was $169,000.

What is your opinion on why such a significant jump?

Inflation did have a role in the increase of prices but I believe the 2-income family was the basis in which families could qualify for a mortgage even with interest rates around 18%.

Can you imagine if the Fed today would raise interest rates to 6% …… we would go into a depression!

The change in the family to a 2-income family caused the median price of homes to skyrocket. In the ‘70’s, the move-up market was created! The second income added over 30% to the available income to be qualified for a home mortgage.  The housing market shifted over night as builders built homes to meet the demand primarily driven by available family income – the market changed!

1970 - 1979                                         2010-2012      

Prime Rate                                          12%                                                     3.25%

SF Housing Starts                               888,100                                               800,000

US Population                                     213,300,000                                        314,000,000

Home Ownership Rate                       64.4%                                                  65.3%

Participation Rate                               61%                                                     64.0% 

Please tell me that you see the stark differences between 1970 and 2012

but also see the deep concern in the differences. This is not going to end well for the housing industry.

Little did we know that the 70’s would change us forever!

Live: we started to live further out from urban cores; “nice but not necessary” not practiced; today, vertical mixed use developments are the modern small town America

Work: Mom’s and Dad’s started to both work; today over 50% of mothers and over 50% single parents with preschool children are employed outside the home; hand held calculators in the 70’s to iPads now

Shop: Walmart went national in the 70’s; from the JC Penny catalog and Woolworths to internet shopping

Play: HBO was founded in 1972 and ESPN in 1979. Today, technology overload. Eyes clued to a screen rather than playing outside.