In the conclusion of her essay, Barbara Kelly writes, “For many Americans, the privately-owned, entry-level house and lot, typified by those at Levittown, has become unreachable. . . It begins to appear that the postwar American affluence, and the way of life it fostered, was not the permanent revolution it appeared, but rather an aberration.” Do you agree with her? Why or why not?
February 24, 2019 at 9:11 pm
I do not agree with Kelly’s evaluation of postwar American affluence. In her article, her comparisons of the costs of mortgages from Levittown versus the present (1995) do not add up. Next, by many metrics, the living standards provided by the median home in the United States have dramatically increased. Overall, the American dream by the standards of Levittown is alive and well (and less segregated), but decades of economic growth coupled with growing inequality created new standards of the American dream which have outpaced the middle class. These circumstances create the perception that Kelly is right even though her specific arguments are wrong.
First, Kelly’s pricing of home mortgages relative to wage income is inconsistent and does not reflect data. According to Wikipedia, the inflation-adjusted price of Levittown houses is roughly $85-90k in 2015 dollars, or about $60k in 1995 dollars. (Wikipedia, inflation calculator) Kelly claims such a house would consume 25% of income, and typically “represented a commitment of from two-and-one-half to three years’’ income, with a single wage earner.” Then, she says that today (1995), “a one hundred thousand dollar mortgage represents as much as four years’ income for a typical two-income family, and, with real estate taxes, can consume as much as fifty percent of monthly income”. In Kelly’s 1995 terms, a $100k mortgage is 67% more than the $60k mortgage needed to buy a Levittown house (as those homes could be bought with no down-payment so the mortgage is the whole price) but real hourly wages relative to 1947 have increased by 2.5x in 1995 and by 3x today (FRED). Kelly’s relative cost estimation does not add up, as something 67% more expensive cannot be more burdensome to someone who makes 150% more income (or 300% more if you follow her change from a one-income to a two-income household). In fact, home ownership was higher in 1995 (and today) than during the 1950s, so a higher portion of the middle class own a home than in the Levittown era.
Further, the average size of a house has dramatically increased while the number of people per household shrank from 3.37 (1950) to 3.01 (1973) to 2.54 (2015) (Census). In 1950, the median size of a new US single-family home was about 1,000 square feet, by 1973 it was 1,500 square feet, in 1995 it was roughly 1,900 square feet and in 2015 it grew further to nearly 2,500 square feet. (Census) Because the average number of people per household shrank, the average house had 293 square feet per person in 1950, 507 square feet per person in 1973, and 971 square feet per person by 2015. (Census) The average American now has as much square footage as an entire average 1950s house. Clearly, American prosperity has not floundered.
While America still is prosperous and Levittown standards of living are more achievable today than in the 1950s, the American Dream now has higher standards. The homebuyers of Levittown were largely first-time home buyers. Having fought in World War II and benefiting from the new GI bill, many were part of the first generation of lower-middle-class Americans to access single-family home ownership. In 1995 and today, more homebuyers were socialized in single-family suburban environments like Levittown. The American Dream has shifted from achieving home-ownership to out-doing your parents’ home-ownership. Housing prices and rents have increased relative to inflation since 1973 (up roughly 50% over 4 decades) and rents have largely moved in-line with house prices. (FRED) Thus, today’s American is more able to access Levittown standards of living, but the benchmark of the American Dream has shifted upwards as well. Inequality of wealth has stretched the standards of middle-class living beyond the paycheck of the middle class, as household debt relative to disposable income has doubled since 1950. (Peter G. Peterson Foundation) Thus, Kelly is partly right that the American Dream is harder for many today than in the 1950s but ignores that the American Dream has changed and that the middle class is more able to achieve Levittown standards of living than before.
In conclusion, while Kelly’s analysis of how federal housing policy can dramatically influence social norms is insightful, her faulty economics weaken her overall claims. The standards of the American Dream have changed, and while inequality may threaten today’s American Dream, decades of growth make the standards of Levittown achievable, and without the explicit racial segregation.
*FRED and Census refer to the sources used by linked sources, and FRED is the Federal Reserve.
Sources in more detail:
Levittown prices:
https://en.wikipedia.org/wiki/Levittown,_New_York
House size+ ppl per house:
https://www.treehugger.com/green-architecture/anerican-houses-are-huge-3-times-bigger.html
https://www.darrinqualman.com/house-size/
https://2.bp.blogspot.com/-PVJvooNq2QI/V1aN5Ndtf0I/AAAAAAAAUQk/jrZHqFyoJrARYiBCPYie4wc1oVHbZUtogCLcB/s1600/housing1.png
https://3.bp.blogspot.com/-sJG2snctNKw/V1aN-vamxoI/AAAAAAAAUQs/afpA4FT6X8Ex3yT8O6KbRo1e735WGiEKQCLcB/s1600/housing2.png
house price index/inflation:
https://inflationdata.com/articles/inflation-adjusted-prices/inflation-adjusted-housing-prices/
http://www.in2013dollars.com/1995-dollars-in-2015?amount=66
http://www.jparsons.net/housingbubble/
wages:
https://www.brookings.edu/research/thirteen-facts-about-wage-growth/
home ownership:
https://dqydj.com/historical-homeownership-rate-in-the-united-states-1890-present/
household debt:
https://www.pgpf.org/chart-archive/0062_household-debt