What Homes Cost: Then vs. Now
Let’s start with our grandparents.
1920s
- Average U.S. home price: ~$6,000
- Median household income: ~$1,500 per year
- Home price ≈ 4× annual income
- Mortgages were shorter and harder to access, but prices were reachable with savings and steady work.
Now move forward to our parents’ era.
1970s–1980s
- Average home price (1980): ~$47,000
- Median household income: ~$21,000
- Home price ≈ 2–2.5× income
- 30-year mortgages became standard
- In many cases, one income could support homeownership.
Now look at where we are today.
2025
Median U.S. home price: ~$420,000–$450,000
- Median household income: ~$75,000
- Home price ≈ 6× income nationally
- In major metros (Chicago included): often 7–10× income
- Mortgage rates: 6–7%+, more than double what buyers saw in 2021
Now look at the other side of this story.
U.S. homeowners’ equity in real estate has climbed to roughly $35 trillion. That number is hard to even conceptualize. In the 1950s, it was barely measurable. Today, it represents one of the largest pools of household wealth in the country.
Notice the shape of that curve.
For millions of families, that appreciation is retirement security. It’s borrowing power. It’s the ability to fund college, start businesses, or pass wealth to the next generation.
So when we talk about “making housing affordable,” we’re not just talking about lower prices in isolation. We’re talking about potentially compressing one of the largest asset bases that American households rely on.
That’s the tension!!!
Housing is both a necessity and a financial asset. It is shelter, but it is also leverage, savings, and long-term compounding wrapped into a single structure. When prices rise, entry becomes harder. When prices fall, balance sheets shrink.
Monthly Affordability Is Where It Really Shows Up
The price comparison alone doesn’t tell the full story.
In the 1980s:
- Housing typically consumes 20–25% of household income.
- Even with higher interest rates, lower prices kept payments manageable.
Today:
- A $450K home at 6.5% interest often consumes 40–50%+ of household income.
- That’s before taxes, insurance, maintenance, childcare, or healthcare.
I think this is why ownership feels impossible to so many people. Because mathematically, in many markets, it is.
Supply Never Caught Up
One reason this gap keeps widening is simple but often overlooked.
The U.S. underbuilt housing for more than a decade after 2008.
- Estimated housing shortage: 4–7 million homes
- Construction is slower, more regulated, and more expensive.
- Entry-level homes have quietly disappeared.
In 1980, about 40% of new homes were under 1,400 sq ft.
Today, that number is under 10%.
I think we stopped building for first-time buyers without fully realizing the consequences.
Why This Cycle Feels Different
I’ve lived through housing cycles before...But this one feels different because multiple pressures are compounding at once.
- Construction costs have increased by 30–40% since 2020
- Skilled labor shortages
- Zoning and density constraints
- Financing costs doubling
- Investors are competing directly with families for supply
Each factor alone is manageable. Together, they create exponential pressure. That’s why affordability keeps eroding even when the market “slows.”
The Solution?
From a leadership perspective, the solution isn’t hoping for a price crash. It’s realigning incentives.
That means modernizing zoning, accelerating permitting, allowing density, and encouraging smaller, more attainable homes. It means capital markets are recognizing that workforce housing isn’t charity!
It’s long-term economic infrastructure. It means acknowledging a hard truth that affordability improves sustainably only when supply expands.
The real answer isn’t lower prices. IT IS MORE EFFICIENT AND AFFORDABLE HOMES! And that, my exponential amigos, is where Biju, Lightspeed, and these two exponential trends came together this week!
Leadership now is about rebuilding the entry point to ownership, deliberately, intelligently, and at scale (which Lightspeed plans to do).
🎙 Tune into Leadership, AI, and Investing with Biju Kulathakal
In this episode of Exponential Growth, I sat down with Biju Kulathakal, Founder and CEO at LightSpeed, Co-founder at Halo Investing, and one of the early co-founders of Redbox, to explore how innovation, leadership, and purpose are shaping the next decade of exponential growth.
From energy and AI to investing and housing, this conversation dives deep into how technology and capital are converging to redefine industries, and how leaders can stay ahead of the curve. His journey from aerospace engineer to fintech founder is a masterclass in vision, resilience, and leading through change.
If you’re passionate about leadership, innovation, and investing in the future, this is a must-listen conversation.
🎧 Listen now to Exponential Growth, where we explore the ideas, leaders, and forces shaping the future of our world.
What This Means for YOU
- Prioritize AI/robotics enablers in housing construction — Lightspeed and similar players are proving modular, automated building can dramatically reduce timelines and labor costs, making them prime targets for investment or partnerships as the sector scales to meet chronic shortages.
- Capitalize on the affordability megatrend — With exponential home-price growth locking out younger buyers, bet on disruptive solutions like Lightspeed's robotics-driven approach to unlock faster, cheaper production and restore generational access to ownership.
- Align investments with the housing supply revolution — Billions will flow into AI-optimized modular factories and robotic systems; position early in these innovative builders to capture outsized returns as policy, demand, and tech converge to solve the crisis.
Opportunities like Lightspeed remind us that exponential problems attract exponential solutions!!!!
Let’s keep growing exponentially,
David Olivencia
