Vintage Snapshot: Could These Folks Really Afford A New Buick? Of Course! Here’s Why

This snapshot posted recently of a 1959 Buick in the driveway of a fairly commonly-sized newish house of the times provoked some interesting comments about the growth of new houses as well as a question from one of our Australian readers: “Would someone with a fairly ordinary house like that in 1959 really buy a Buick?” The simple answer is yes, but the reasons  — there are several — as to why are a bit more complicated.

The quick and easy one has to do with the price of the ’59 Buick LeSabre, whose base price ($2925) was only 5% more than a Chevy Impala V8 4-door hardtop. Add in a few options (automatic, radio, tinted windows and whitewalls, let’s round that up to $3600, which in 2023 adjusted dollars is $38k  That’s right about same as the price of a fairly nice new car today, including a top trim Buick Encore GX.

But the really big difference is of course in the price of the house, which in 1960 was about $12k ($126k adjusted). That’s only two times the median annual wage in 1960 ($5600, or $59k adjusted). Today, that very same house in Cody, WY, now very obsolete (check out the kitchen, above), is valued at $310k, or 6.5 time the current median annual wage ($48k). That’s up 250% in inflation adjusted dollars.

So yes, given that, these folks in 1960 had plenty of money left over to buy a new Buick. Let’s run the numbers, using all 2023 inflation adjusted dollars: If the head of the household made the median wage ($59k), their monthly pay was $4916. The monthly payment on the 5% mortgage (assuming a 20% down payment) would have been $690. That’s a mere 14% of their paycheck. So there was plenty of money left to buy a Buick, or even something more expensive. Assuming they got $8,000 in trade in, the $30k 3 year car loan would have had monthly payments of $912. That’s quite a bit more than the mortgage payment, but it still leaves $3314 per month left for taxes and all other household expenses.

This particular house was built in 1954. Quite likely the owners bought it new then, and it would have cost even less then, right around 100k adjusted (or even less). That means their payments were only $400/month (adjusted). And lots of folks paid off their mortgages faster; they might well have already paid it off by 1960.

Today, the US median house price is $420k (up 330% since 1960, in adjusted dollars), which is equal to almost 9 times the annual median income. With a 20% down payment, and a 30 year loan at 6.9%, that comes to a monthly payment of $2,240. At the current median income of $4,000/month, that leaves only $1760/month for taxes, insurance and all other expenses. So much for a nice new car in the garage.

In Wyoming, where house prices are bit more moderate ($340k median), that wage would go a bit further, but it would still be a stretch. But this particular tired old house would still cost some $1900/month in interest, principal, property taxes and homeowner’s insurance with 20% down.

Americans who had at least a fairly decent job had a remarkably high standard of living back then, due mostly to very low housing costs. That’s what’s changed more than any other single economic factor. Other expenses have gone up (education, medical) and others down (food, all sorts of consumer goods, electronics, etc.). Car ownership has actually gotten cheaper, considering their vastly greater reliability, durability and improved economy, although that trend has reversed some in the past couple of years due to higher prices, interests and insurance. So housing costs are the single biggest change.

Too bad there wasn’t a car in the driveway of that house when Google drove by in 2019. It’s a rental now (it last rented for $1150 in 2020). Given the cargo trailer in the driveway, we can be pretty safe in assuming that it’s a full size pickup. If it’s a nice new one, the monthly payments and insurance could well be close to about what the rent on the house is.

Related CC reading:

The Cost To Own And Operate A Car Has Fallen 25% Since 1968 – Update: That’s Still The Case In 2021

Everybody Is Bitching About the Rapidly Increasing Price of Cars But They All Have It Wrong – Here’s a List of New Car Prices Going Back to 1967 and 2020 Is the Cheapest