Reader Holly Writes
Dear Mish,
Recently I came into possession of the financial records of my grandfather. I plugged a bunch of the numbers into a spreadsheet just for kicks. What is most interesting about these numbers is they start in 1941 when he purchased the home. It was left to my mother, and then to me in 2020 (80 years of finances for the same home!)
My Grandfather was in the same job and same house his entire life. He maintained the same standard of living in all the years I knew him.
The numbers show that the cost of maintaining a stable standard of living reflects a much higher inflation rate than any of the indexes I have compared it too.
After my grandfather passed in 2003 until I acquired the home in 2020 I had to approximate some expenses. I took the records I had from 2020 and 2021 and filled in the missing gaps.
Regards,
Holly
10-Year Incremental Changes
Wow.
Thanks Holly.
I am sure all my readers will appreciate you sharing your story and data.
I am in contact with Holly and will post the city, square feet, number of bedrooms, purchase price and sales price if I can get them.
Notice the distinct jumps in inflation. The last big acceleration started with the housing bubble in 2000.
More Details
The home is in Wellesly, Massachusetts. 3 bedrooms, 1677 sq. ft.
Over the years Wellesley homes got much bigger and pricier.
The home was purchased in late 1941, so the real estate taxes were probably part of the closing, same as the water bill. They were connected to sewer in 1980 (I found dated pics of the torn up back yard).
The phone bill were cell phones in 2020 , I am not sure what year the actual switch over was, so I just used an estimate and filled in the gaps back to 2003.
I believe the home was purchased for $3,000 in 1941 but that is from memory, so I could be wrong. He paid cash, so no there are no mortgage records to check.
My mother let the home go into a state of terrible disrepair, and it had to be sold as a tear down. The estimates to repair the damage were 400-600K!
I sold it last year for 860K, I couldn’t afford to keep it.
Three Related ideas
- The Homeownership Dreams of Zoomers and Millennials Shattered by Prices
- Every Measure of Real Interest Rates Shows the Fed is Out of Control.
- Real Hourly Wages Have Risen Less Than a Penny a Year Since 1973
The Fed is truly out of control and has been for a long time.
Please Subscribe!
Like these reports? I hope so, and if you do, please Subscribe to MishTalk Email Alerts.
Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.
If you have subscribed and do not get email alerts, please check your spam folder.
Mish
I tested this against the CPI calculator and $55 in 1941 should cost approx. $,1080.00 today based on annual CPI. What a joke!
I found another calculator which allowed me to input the inflation variable and to arrive at a little over $15,000.00 in today’s dollars from $55 in 1941, means inflation averaged 7.3% per annum for the entire 80 years.
That sounds much more realistic and explains why the average person isn’t doing so well.
Thank you Mish and Holley!!!
Mind boggling.
Determining Percentage Gain or Loss
Take the selling price and subtract the initial purchase price. The result is the gain or loss.
Take the gain or loss from the investment and divide it by the original amount or purchase price of the investment.
Finally, multiply the result by 100 to arrive at the percentage change in the investment.
860K sale price minus 3K purchase price = 857K net price appreciation (gain)
857K gain divided by 3K original purchase price = 285.7
285.7 multiplied by 100 = 28570% gain over 80 years.
Yearly average price appreciation = 35.875%
A bit more than your OER number.
Got real estate?
of gold
: 1951
6.007 2021
5.098
8.359
I’d think that would be more accurate than the FED’s measuring stick.
However, the home may have appreciated greatly during that time more than other homes just due to prime location or something, so that’s a bit of a wild card.