THE NOBULL NEWSLETTER
11/02/2026
Out of curiosity, I asked my writing partner Claude whether an how my home buying experience that started in 1970 was different and more affordable than it is today and, if so, in what ways and why. I gave it my numbers (salary and home price from 1970) and asked to stay purely factual and leave political discourse aside. The following, after many questions and asides, is the result. I found the numbers to be fascinating.
Is There an Affordability Crisis? Housing and the Wider Economy
The Short Answer
Yes, an affordability crisis exists, but it is concentrated rather than universal, and it differs by area of the economy. In housing it is a crisis of getting in more than of paying for a home you already own. The median existing home sold for $259,100 in 2018 and for a record $440,600 in June 2026, a rise of about 70 percent. Median household income rose from $63,179 in 2018 to $87,460 in 2025, about 38 percent, and the typical mortgage rate went from about 4.7 percent to about 6.5 percent. By my calculation, principal and interest on the median home with 20 percent down went from about 20 percent of median household income to about 31 percent.
In other areas the problem is of a different kind. Food, electricity, car insurance, and rent have all risen faster than overall prices since 2019, and in 2026 an energy shock tied to the Iran war has pushed inflation to 3.7 percent while pay growth slowed to 3.0 percent, so real hourly earnings fell 0.7 percent over the year to September. That looks more like a price shock layered on top of the housing problem than a second structural crisis, and history is mixed on whether such shocks fade.
For a modest house in a moderately priced town, the picture is different from the national median. The benchmark in the next section shows a home costing the same multiple of income as in 1970. The Cato Institute argues that payment burdens are not far outside historical norms and that serious problems are local. Others point to a record-low share of first-time buyers and a median first-time buyer age of 40. The rest of this essay sorts out where the problem is, who bears it, and why.
A benchmark: income against home price, then and now
A modest house costs a starting professional about the same multiple of salary today as it did in 1970. The example is a new university professor at age 26 buying a 1,100 square foot house in a mid-priced college town, using conventional terms at each date: 20 percent down and a 30-year loan at the prevailing market rate.
1970
Today
Starting salary, new university professor
$11,000
$105,000
Modest 1,100 sq ft house
$21,000
about $200,000
Price divided by salary
1.9
1.9
Down payment (20%)
$4,200
about $40,000
Down payment as share of one year's salary
38%
38%
Mortgage rate
about 7.3% (1971 market average)
about 6.5%
Principal and interest per month
about $115
about $1,010
Principal and interest as share of gross pay
about 13%
about 12%
The 1970 salary and price are an illustrative case. The current price uses a town where the median sale is about $181 per square foot, the salary falls within the $100,000 to $125,000 range for a first-year professor at a major university, and the 1970 rate is the 1971 market average of about 7.3 percent. Property taxes and insurance are excluded from both columns. In a high-tax Michigan town, I estimate they would add roughly five points of pay today.
Three points stand out. First, the price of a modest house relative to pay has not changed in a mid-priced market, and neither has the down payment as a share of a year's salary. Second, that is not the national picture: the median existing home costs about four times this starting salary, more than double the 1970 ratio. Third, houses build wealth for people who own them for years, and that advantage shows up in who can buy now. Repeat buyers put down a median of 23 percent against 10 percent for first-time buyers.
Where the housing problem exists and where it does not
The problem is most severe in a few high-cost metros and mildest in the older, mid-sized metros of the Midwest and the Northeast interior, but it has been worsening fastest in rural counties.
Among metros, one analysis puts San Jose's home price at 11.65 times median income, against 3.07 in Pittsburgh, with California holding four of the five least affordable large metros. The same analysis finds no major metro at or below the 2.6 ratio it treats as a healthy ceiling. Pew's measure for younger buyers, which adjusts income for household size, ranks Utica-Rome, Syracuse, and Rochester among the most affordable at 2.4, 2.6, and 2.7. Regional medians tell the same story: in June 2026 the Northeast median was $564,800, the South $377,700, and the Midwest $346,600.
The split between urban, suburban, and rural counties looks different, because the level and the trend point in opposite directions:
Share of median income needed to buy the median home
Median sale price, change since before the pandemic
Median income, change
Urban counties
39.5%
up 46%
up 39%
Suburban counties
34.6%
up 49%
up 37%
Rural counties
32.3% (was 20.9%)
up 61%
up 33%
These are Redfin's figures for the third quarter of 2025 and its companion release. All three exceed the usual 30 percent guideline. Rural counties started cheaper and still cost less, but they deteriorated fastest, as pandemic-era demand for space, remote work, and cheap borrowing met a thin supply of homes. A White House economic advisers' analysis, which argues for more rural supply, finds that the price-to-income ratio of rural homeowners rose from 2.2 in 2000 to 3.5 in 2023.
Where the problem is mild or absent: moderately priced markets with local wages that keep pace. One Michigan college town's median home sells for about $315,000, and Michigan plumbers earn a median of $80,190, about 26 percent above the national figure. The national median is a poor guide to any one place, because it blends San Jose with Pittsburgh.
Who is affected and who is not
The burden falls mainly on people trying to enter the housing market, while those already inside, especially with a fixed low rate or built-up equity, are largely sheltered.
Group
Position
Evidence
Owners with fixed low-rate mortgages
Largely insulated
50.6% of outstanding mortgages are at 4% or below, and 78% are below 6%
Repeat buyers with equity
Advantaged
Median down payment of 23%, and 30% of all buyers paid cash (NAR)
Older owners
Hold much of the stock
Boomers own 37% of homes while making up just over 20% of the population, and 78% plan to age in place
First-time buyers
Most affected
A record-low 21% of purchases, median age 40, median down payment of 10%, and 22% relied on gifts or loans from family (NAR)
Cost-burdened renters and owners
Strained
One-third of urban and one-quarter of rural households spend over 30% of income on housing
Workers in the highest-cost metros
Strained unless pay covers it
San Francisco's median home price reached $1.7 million and one-bedroom rents rose about 23% in a year
Workers in mid-priced markets
Closer to historical norms
The mid-priced college town in the benchmark above
Education shows up in these numbers, but not as a simple advantage. In 1969, men in professional and technical jobs had median earnings of about $11,750, against $8,730 for craftsmen. Today plumbers and electricians earn medians of about $63,800 and $63,190, while a first-year professor earns roughly $100,000 or more. A tradesman who starts an apprenticeship at 18 is paid while learning, so by my estimate he is well ahead in cumulative earnings when a Ph.D. starts a first job, and the professor catches up around age 50. For that tradesman, the modest $200,000 house is about 3.1 times pay today, against about 2.4 times in 1970, so his housing affordability has worsened more than the professor's.
The practical conclusion is that two households with the same effort and thrift can face very different outcomes, depending on the year they entered the market, the rate they locked in, the town they live in, and whether anyone helped with the down payment.
The main housing factors
Prices rising faster than incomes, on top of higher mortgage rates, is the immediate cause. A long shortage of homes, especially smaller ones, is the leading structural explanation, and several other factors decide who is hit hardest. Each item below says how firm the evidence is.
1. Prices against incomes. Since 2018 the median home price rose about 70 percent and median household income about 38 percent. This is measured, not disputed.
2. Mortgage rates. The lowest rate on record was 2.65 percent in January 2021, and the 2018 average was about 4.7 percent. At about 6.5 percent today, my calculation puts principal and interest on the median home near $2,230 a month, against about $1,075 in 2018.
3. Too few homes, especially small ones. Estimates of the national shortage run from 1.5 million to 5.5 million in one review and from about 1 million to 10 million in another, and a few economists argue the problem is a mismatch of place and price rather than a total shortage. Only 9 percent of new single-family homes in 2024 were under 1,400 square feet, against 40 percent in 1982. Small homes earn builders less per lot because land, utilities, and permits cost about the same at any size, and new homes sold in 2025 were nearly 12 percent smaller than in 2015 but cost 72 percent more per square foot. Small existing homes are not scarce in the stock, since a third of existing homes are under 1,500 square feet, but few come up for sale.
4. Owners who stay put. Median seller tenure reached 11 years, a record, partly because moving would mean giving up a low-rate loan. Older owners are also aging in place.
5. Where the high-paying jobs are. Wages are higher in larger cities, and the link has strengthened over time, because skilled work clusters there. Early evidence suggests AI is adding to this: San Francisco has over 40 percent of AI-related openings and its rents and prices have jumped. How far that spreads is unknown.
6. The pandemic shift. Cheap borrowing and a wish for more space pushed prices up fastest in rural and suburban counties after 2020.
7. Smaller, more numerous households. Average household size fell from 3.1 in 1970 to 2.6 in 2007, and one-person households reached 29 percent of all households in 2025. More households means more homes needed for the same number of people. The effect comes from the number of households, not from how many children a family has.
8. Later marriage and children. The median age at first marriage rose from 26.1 for men and 23.9 for women in 1990 to 30.8 and 28.4 in 2025, and first-time mothers average 27.5, against 21 in 1970. The median first-time buyer age rose from 28 in 1991 to 40. By my arithmetic, marriage timing explains roughly a third of that delay at most. The jump from 33 to 40 in the last five years is too fast for marriage trends, and fits the price and rate shock.
9. One income or two, and family help. The median first-time buyer household earns $94,400, which usually means two earners, and a fifth of first-time buyers use family gifts or loans.
Factors 1 and 2 describe what happened. Factors 3 through 6 are the most plausible reasons it happened, though analysts weigh them differently. Factors 7 through 9 mostly determine who feels it.
Beyond housing: food, energy, transportation, health care, and entertainment
Outside housing, the squeeze is real but takes the form of price spikes in particular items more than a lasting strain across all of them.
Keeping Up With Inflation tracker (BLS, Zillow, EIA data), approximate; gasoline since 2020
Several things the chart cannot show matter for reading it. Overall prices rose about 28 percent in this period, and trackers disagree on pay: one puts wage growth at the same 28 percent, while Experian puts it near 34 percent. So pay roughly matched prices over the whole stretch, but unevenly across categories.
• Food. The long-run trend favors households: food took over a third of spending in 1935 to 1936 and less than half that by 1996 to 1997. The recent spikes in eggs and beef are real but narrow, and food prices rose 2.5 percent over the year to September 2026.
• Energy. Electricity is up sharply since 2019 and rose 4.4 percent over the last 12 months. Gasoline and diesel are the largest 2026 story, covered below.
• Transportation. Car insurance and repairs have been the lasting pressure. Vehicle prices themselves have been calm lately: new vehicles rose 0.3 percent and used vehicles 1.6 percent in 2025.
• Health care and tuition. Medical care prices have risen modestly, 1.5 percent over the year to September 2026, and education 3.8 percent. The larger story is the budget share: housing, health care, and tuition together rose from 22 percent of consumer spending in 1960 to 37 percent.
• Entertainment and travel. Recreation prices are up about 2.8 percent over the year, modest by comparison. Air travel is the exception, with fares up 22.4 percent, tied to jet fuel. Entertainment is discretionary, so rising prices there are less of a hardship, and I found little hard data on it beyond one tracker's streaming figure.
• Pay against prices now. Before the war, pay was ahead: real hourly earnings rose 1.3 percent over the year to February. By September, real earnings were down 0.7 percent over the year.
The 2026 energy shock and the Iran war
Most of the 2026 rise in inflation comes from energy prices after the war with Iran began at the end of February, and its effects are spreading beyond fuel. Consumer prices were rising 2.4 percent a year in February, before the war, and 3.7 percent in September.
• Fuel. The war has hampered Middle East oil and gas exports, and Iranian strikes damaged dozens of Gulf refineries. Gasoline rose 9.1 percent in September alone, over half the monthly increase in the index, and diesel stood near $6.30 a gallon, about 68 percent above its pre-war level. The energy index was up 20.4 percent over the year.
• Air travel and freight. Airline fares are up 22.4 percent over the year on jet fuel costs, and shipping companies and airlines added fuel surcharges and fees that flow into retail prices.
• Food, with a lag. Fertilizer moves through the same shipping lane, so the main risk is later, higher farm costs. An industry group warned that food-at-home inflation could top 4 percent in 2026. So far groceries have been flat to falling.
• Electricity. Electricity is up 4.4 percent over the last 12 months.
• Other factors. Economists also cite tariffs, AI data center construction, and strong travel demand. One report says the effect of tariffs has been gradually waning.
The wage side matters as much. Average hourly earnings grew 3.0 percent over the year against 3.7 percent inflation, so real pay fell 0.7 percent. Economists say the surge could pressure the Federal Reserve to raise interest rates, which would add to mortgage costs and bear on the housing problem described above.
How this compares with earlier wars
Wartime price shocks have faded in some episodes and persisted in others, and inflation so far in the Iran war is lower than the peak in every earlier episode below, though this war is not over.
Minneapolis Fed CPI history (annual averages), 1990 from press reports of the December-to-December change, 2026 from BLS and CNBC
The table sets out what drove prices in each case and what happened next.
Episode
Main price driver
Policy response
What came next
World War II
Wartime demand and shortages
Price and wage controls. From April 1943 to June 1946 consumer prices rose just 2.3 percent a year
Once controls ended, inflation jumped to 8.5 percent in 1946 and 14.4 percent in 1947
Korean War
A surge in buying and hoardingat the start, recalling World War II shortages
Price controls from January 1951
Inflation fell quickly once the war wound down, to 2.3 percent in 1952 and 0.8 percent in 1953
Vietnam era
Military spending alongside new domestic programs, paid for mostly by borrowing
A one-year 10 percent surtax, then wage and price controls in August 1971
Inflation climbed year after year and did not fade when the war ended
1973 oil embargo
Arab producers cut oil supply after the Yom Kippur War, and oil quadrupled to $11.65 a barrel, on top of a weak dollar, food prices, and slow productivity growth
Policy debated, with the Fed unsure how much it could influence a supply shock
Inflation stayed high through the rest of the decade
Gulf War, 1990 to 1991
Oil rose from about $17 to nearly $40 and gasoline rose about 37 percent in 1990
The Fed looked through the spike and cut rates
A recession ran from July 1990 to March 1991, though a Congressional Research Service review says most economists do not blame the war alone for it
Iraq War, 2003
Energy prices jumped in February 2003 as war neared
None specific
Oil fell back before the conflict ended, and the war's economic effects were mild
Iran war, 2026
Closure of the Strait of Hormuz and damaged Gulf refineries, with gasoline up 45 percent since late February
The Fed is under pressure to raise rates
Ongoing
The pattern is mixed. Oil-driven spikes faded when supply recovered and policy looked through them, as in 1990 to 1991 and 2003, but persisted when other pressures were already building, as in the 1970s, when a weak dollar, high food prices, and slow productivity growth overlapped with the oil shock. Wars paid for mostly by borrowing and fought without controls, like Vietnam, left inflation elevated for years. And controls only postponed price increases after World War II.
The 2026 episode looks more like an energy shock than a broad inflation. Core inflation, which excludes food and energy, was 2.6 percent in September against 3.7 percent for all items. That resembles 1990 more than the 1970s. But economists warn that energy prices may not ease until mid-2027 even if shipping lanes recover, and the outcome depends on how long the war lasts.
Two limits on this comparison. The inflation measures differ in basis, as the chart note says, and I did not find consistent real-wage series for the earlier wars, so the comparison rests on prices. For 2026, pay grew 3.0 percent against 3.7 percent inflation, a small real decline.
Claims the evidence does not settle
Several popular explanations are partly supported and partly not, and some turn on values the data cannot decide.
• Blaming baby boomers. The ownership figures are lopsided: empty-nest boomers hold 28 percent of homes with three or more bedrooms, against 14 percent for millennials with children, and most plan to stay. But staying in a long-held home is a rational response to a low rate, and an Urban Institute housing specialist, interviewed by NPR, called blaming boomers for the shortage unfair. The data show where the wealth sits, not who caused the shortage.
• Impatience and the dream home today. Attitudes cannot be measured here, but choices can. First-time buyers are older than ever, about 70 percent of existing-home sales are for properties smaller than the average new home, and new homes have been shrinking since 2015. On the other hand, new single-family homes still average about 2,400 square feet, more than double a 1,100 square foot starter house, so expectations about space have risen. The evidence does not show that today's buyers are refusing smaller homes. It does show they wait longer to buy any home.
• Work ethic across generations. Summer jobs for teenagers peaked at 58 percent in 1978 and fell to about 31 percent by 2014, while 40 percent of full-time undergraduates are employed but only 10 percent work 35 or more hours. Effort then and now differs in form, and the data do not rank it.
• The size of the housing shortage. Estimates run from none to about 20 million homes. The spread comes mainly from assumptions about vacancy and missing households, and some of the highest and the lowest estimates come the same side of the political aisle.
• How much is regulation, cost, or builder choice. Builders' returns on small homes are the mechanism, but land, permit fees, and local rules feed into those returns, and sources weigh them differently. The largest builder does sell homes starting near 900 square feet, so small homes can be built at a profit under some conditions.
• How much of the 2026 squeeze is the war. Core inflation of 2.6 percent against 3.7 percent overall points to energy as the main driver, but prices were already rising 2.4 percent before the war, and other factors such as tariffs and AI-related construction demand overlap with it. Nobody can cleanly separate them.
• What AI will do. Early evidence points toward concentration in a few expensive metros. For young graduates, unemployment was 5.6 percent in March 2026 against 4.2 percent overall, yet a fuller occupation analysisfound no clear sign AI is driving it. Construction productivity has risen only about 16 percent since 1993, so automated building is not yet a fix.
A fair conclusion
The honest answer is that there are two different problems. One is a lasting crisis of entry in housing, concentrated by place and timing. The other is a price shock in 2026, driven mainly by energy, that history says may or may not fade.
The housing problem is real for first-time buyers in expensive metros and for anyone who wants the median home, where the cost relative to pay has roughly doubled since 1970 and the payment has doubled since 2018. It is largely absent for owners who locked in low rates before 2020, for buyers with equity from an earlier home, and for people who want a modest house in a moderately priced town. In those places the price relative to pay, and the cash needed relative to a year's salary, are about where they were in 1970.
The wider economy looks different. Over the long run food has taken a shrinking share of budgets, while housing, health care, and tuition have taken more. Since 2019 electricity, rent, insurance, and some foods rose faster than prices overall, but pay roughly kept pace until the war, when inflation of 3.7 percent overtook 3.0 percent wage growth. Compared with earlier wartime episodes, inflation so far is lower than the peak in each, and the closest parallels are mixed: the 1990 oil spike faded while the 1970s shocks did not.
Who is affected depends less on effort than on when you entered the market, what rate you locked in, where you live, and whether you had equity or family help. What would change the arithmetic is measurable: more homes at lower price points, lower rates, faster income growth, and an end to the energy disruption. Which of those to pursue, at whose cost, is a choice the data cannot make. A useful test for any explanation is whether it rests on figures that can be checked.
Sources
Figures marked as my calculation or estimate are built from these sources and the stated assumptions. Figures from price trackers and news aggregators are approximate.
• Prices, incomes, and rates: NAR, 2018 market; Mortgage News Daily on NAR, June 2026; Census, income 2018; Fox 6 on 2025 income; Bankrate rate history; Rocket Mortgage rate history; CapCenter rates since 1971; East Lansing prices (Resideline)
• Buyers and owners: NAR, 2025 buyer profile; HousingWire summary; Builder on buyer incomes; Realtor.com lock-in data; boomer ownership (NAR/Forbes); Redfin on aging in place; empty-nest boomers and large homes; NPR on blaming boomers
• Place: Redfin, urban, suburban, and rural; Business Wire companion release; Council of Economic Advisers on rural housing; cost burden by rural and urban area; metro price-to-income ratios; Pew on young buyers by metro; Michigan plumbers
• Pay and education: Census, 1970 earnings by occupation; BLS trade wages via Trade Career Path; Richmond Fed on city wages
• Supply and builders: Harvard JCHS; Inman on shortage estimates; Boston Globe on estimates; Mercatus on starter homes; NAHB on home sizes; new-home sizes and prices; buyers choosing smaller homes
• Households and family timing: Census household size, 2007; Census households, 2025; median marriage ages; CDC first-birth age via Axios
• Food, energy, transportation, and other prices: price changes since 2019 (Keeping Up With Inflation); Experian on inflation by category; BLS, spending shares 1935 to 1997; Apollo on spending shares; BLS, 2025 in review; BLS real earnings, September 2026; BLS real earnings, March 2026; September 2026 CPI release; Stephens CPI summary; core inflation details
• The 2026 energy shock: BLS, February 2026 CPI; CNBC, September 2026 breakdown; NBC News; Council on Foreign Relations; September 2026 inflation summary; March 2026 inflation summary; ConsumerAffairs on food and fertilizer; FMI on food prices; Trading Economics on the October release
• Earlier wars: Minneapolis Fed, CPI history; Cambridge University Press, wartime price controls; Econbrowser on the Korean War; Encyclopedia.com on controls; Economics USA transcript on the surtax; NBER on 1971 controls; Federal Reserve History, 1973 to 1974 oil shock; Standard Chartered on the Gulf War; 1991 press report on 1990 inflation; Gulf War recession (TrendSpider); Congressional Research Service on the Iraq War economy; AP on February 2003 prices
• Work, AI, and the future: Pew on teen summer jobs; NCES on working students; San Francisco housing (CNN via NBC Palm Springs); Fortune on San Francisco; EPI on AI and graduates; SoFi on graduate unemployment; PYMNTS on construction productivity
• A skeptical view of the crisis: Cato Institute
