How Much Were Houses Back in 1920?

Housing prices in the United States during 1920 reflect a period of significant economic and societal transition following World War I. Understanding these prices requires examining factors that shaped the market, from economic shifts to changes in population distribution and home financing. This historical perspective provides insight into the affordability and accessibility of homeownership for the average American family at the dawn of the “Roaring Twenties.”

Average Home Values in 1920

During 1920, the median value for a home in the United States was approximately $2,938. However, prices for a new house could range higher, often found around $6,296 to $6,500. For homes that were mortgaged, the average value stood at about $4,900. These figures represent a national average, and actual prices varied based on specific property characteristics and location.

Homes constructed during this period were typically much smaller than modern residences, with average sizes ranging from 742 to 1,223 square feet. Even these prices presented a substantial investment for many families. While the raw numbers appear low by today’s standards, their true cost must be considered within the economic context of the time.

Factors Influencing 1920 Housing Prices

Post-World War I economic conditions and evolving societal trends shaped housing prices in 1920. The immediate aftermath of the war saw a brief but sharp recession from January 1920 to July 1921, characterized by deflation and a surge in the civilian labor force as troops returned home. The Federal Reserve also tightened monetary policy, leading to increased interest rates. Despite this initial economic turbulence, the decade soon transitioned into the “Roaring Twenties,” a period marked by economic growth and rising incomes for many.

Improved credit availability, though still limited by contemporary standards, contributed to increased home purchases and upward pressure on prices. The growing consumer culture of the era, fueled by mass production, further stimulated demand across various sectors, including housing. A transformative demographic shift also played a significant role, as 1920 marked the first time more Americans lived in urban areas than in rural ones. This rapid urbanization increased demand for housing in cities, contributing to rising property values.

Financing for homes in 1920 differed considerably from today’s mortgage landscape. Pre-Depression mortgages typically featured variable interest rates and required substantial down payments, often capping loan-to-value ratios at 50 percent. Many of these loans were non-amortizing, meaning borrowers made interest-only payments, with the entire principal balance due as a large balloon payment at the end of short terms, often as brief as five years. The absence of widespread long-term, fixed-rate, amortizing mortgages meant that homeownership was a less accessible endeavor for many, primarily concentrated among those with significant upfront capital.

The Cost of Living Context in 1920

The average annual household income in the United States was around $3,269 to $3,269.40. For many individual workers, the average annual wage across all industries was closer to $1,400. This disparity highlights that household income often relied on multiple contributors, even if only one primary wage earner.

Essential goods and services, while appearing inexpensive today, consumed a significant portion of these incomes. A gallon of gasoline cost approximately $0.30, and a new car could be purchased for around $525. Groceries, such as three pounds of macaroni for $0.25 or a dozen eggs for $0.47, were also notable expenses within a household budget. Other purchases, like a new radio for over $200 at the beginning of the decade or a washing machine for $82, represented considerable investments.

A house costing around $6,300 meant it represented roughly six times a working-class man’s annual salary. This ratio underscores the significant financial commitment homeownership demanded, especially considering the different mortgage structures of the time. The homeownership rate in 1920 was approximately 45.6 percent, suggesting that for nearly half of American households, purchasing a home remained an aspirational goal rather than a widespread reality.

Regional Differences in 1920 Home Values

Home values in 1920 exhibited considerable variation across different regions and types of communities within the United States. Mortgage interest rates, for instance, were not uniform, tending to be lower in the urban Northeast and Midwest compared to the South and West. For example, the average mortgage rate in New Hampshire was 5.1 percent, while in Montana it was 8.4 percent. This regional disparity in lending costs could influence the overall affordability of a home.

Urban centers, particularly major cities, generally commanded higher property values due to increased demand driven by urbanization. For instance, the average value of owned mortgaged homes in Manhattan reached $23,539 in 1920. In contrast, cities like Bridgeport, Connecticut, and Hartford, Connecticut, had average mortgaged home values of $7,076 and $10,483, respectively, still considerably higher than the national average. The intensive land use in densely populated areas, like New York City, led to a lower homeownership rate, as apartment buildings became a more prevalent housing solution.

While specific prices for rural homes are less documented, the mass migration from farms to cities indicates that rural properties likely held lower values due to decreased demand. These regional economic dynamics, coupled with varying population densities and infrastructure development, contributed to a diverse housing market across the country.