The Case of the Missing $64,000 Homes
I want to open with a silly data point. The most clicked link in last week's newsletter was to the WrestleMania highlight of Cody Rhodes winning the WWE Universal Title at WrestleMania XL. More of you clicked it than all the other links in the newsletter combined. I don’t know why but that really cracks me up. Shout out to my closeted, wrestling degens, I see you.
It's been a wet and interesting week here in the Gulf. UAE averages fewer than five inches of rain a year but parts of the country got battered by ten inches in a twenty-four hour period on Tuesday and Wednesday—two years worth of rain in a day. This led to widespread flooding, especially in the Northern Emirates, and a return to remote learning at our school. Here’s the thing, I like wearing basketball shorts while I do my job as much as the next guy, but I still haven't acquired a taste for online teaching. It’s kinda the pits.
Several people reached out to check on us. I assured them we’re okay. We live on the 39th floor, after all. Our patio furniture looks a little worse for the wear but we’re good. Flooding in Abu Dhabi was lighter than in Dubai and Sharjah, although it was worse in outlying areas. We're supposed to be back in person on Monday but there's more rain in the forecast on Tuesday—we'll see what happens.
In the newsletter today, I want to share two things that caught my attention this week—one long thread and one book.
The Thread: Sidereal is a person from Seattle that I follow on Mastodon. Someone using the same handle used to be a blogger on Sounder at Heart, the go to blog for my beloved and struggling football team. I've never verified if they're the same person but I think they are. If that's the case, I've been reading them online since like 2010.
This week, Sidereal sent me down a two-plus hour research rabbit hole about Sears Kit Houses. If you're unacquainted. Sears is a US department store founded in 1892. They were notable for various things at points in their run: Craftsman tools, sweet deals on appliances, and their famous catalog, which they stopped publishing in 1993. You could order anything from them: tools, clothes, TVs, appliances. They were basically a brick & mortar Amazon. They sold everything. Hell, up until 1942 they sold entire houses. I “knew” about this but I didn’t “know, know” about it, until Sidereals’s thread.
He started off asking two simple questions:
Does anyone know if any of the blueprints/schematics for old Sears kit homes are available online anywhere?
Does anyone know any like history professors in Chicago or anything who would have some weird architectural archives or whatever?
This touched off one of those collective research and knowledge sharing projects that used to make the internet fun. Sidereal joked about how life was better “when you could order an entire house from the Sears catalog” and build it for yourself. But as people started digging in, the numbers started to blow my mind.
The house kits produced by Sears were sold all over the country and moved via rail. The houses cost in the $1700 range in mid century US dollars. While inflation is real and the dollar has lost much of its purchasing power over time, it hasn’t lost that much. Here’s an excerpt from an article I came across by Adele Peters:
When a $1.1 million Craftsman house in Boulder, Colorado, was first built in 1923, the materials came from a Sears catalog kit that cost $1,797, or the equivalent of around $32,000 today. Even with the extra cost of buying land, adding a foundation, plumbing, electricity, and potentially hiring a construction crew—though the house could technically be put together yourself, Ikea-style—it might have cost a total of around $64,000 in today’s dollars, a fraction of what it costs to build or buy a house now.
$1797 in 1923 dollars is $32,822.26 in 2024 dollars—that’s the inflation adjusted cost of the home. But in today’s market the home is valued at $1,558,700; there’s an extra $1,525,000 in appreciation.
This is the story of housing in America over the last one hundred years.
This is the fuel of Millennial and Zoomer outrage at the American economic landscape: what used to buy a house in 1923, won’t pay a month's rent in 2024 (nominal dollars). Adjusting for inflation (real dollars), what used to buy a house is barely a down payment in today’s market.
The thread goes on and people share stories of their family’s experiences with the kit houses. Then it takes a turn to the business practices of Sears. Sidereal and other readers point out that Sears was uniquely popular among Black families in the south because they didn’t discriminate against their catalog shoppers, unlike local white shopkeepers. Black shoppers paid the same prices and got the same service regardless of their race.
Sears also made it a point to produce their catalogs in multiple languages, targeting immigrant groups. They sold the homes to anyone who ordered them and shipped them all around the country via rail.
They also punished sales people for upselling customers on features they didn't really need or want.
I could go on but it’s really worth reading the thread and related posts from others.
The Book: Last week, I started reading Chip War by Chris Miller. Oh, boy that is gonna need to be a whole nother newsletter when I finish it.
The gist of the book is that the world, especially the US and China, are junkie-level dependent on semiconductors. These chips are in everything: obvious places like laptops, phones, and TVs, but also children's toys, cars, and your thermostat. Nearly all of them come from Taiwan. It’s an unstated underlying driver of the tension between the US & Taiwan and China. I am early in the book—but it is fascinating.
For example, one company you've likely never heard of, Taiwan Semiconductor Manufacturing Corporation, produces 60% of the world's chips but 90% of the most advanced high-performing chips. Oh, not crazy enough? Try this: China spends more importing chips than they do importing oil.
Access to semiconductors is necessary for nearly all modern manufacturing and even the threat of limiting access to them is enough to spark a hot war. I'll share more from the book as I work my way through it. But if you want to scoop up a copy and read along with me, I’d love to hear your thoughts.
That’s it for this week! Stay dry out there and be good to yourselves.
As always, if you have any thoughts or feedback about the newsletter, I welcome it, and I really appreciate it when folks share the newsletter with their friends.