When we talk about how much a house has appreciated, the math seems pretty straightforward. What did you pay for it, and what is it worth today?
I started thinking differently about that after reading an analysis by my broker, Dennis Norman of MORE, REALTORS®, who has been tracking and analyzing St. Louis real estate data for decades.. Dennis compared St. Louis home prices in 1975 and today, first in dollars and then in gold. His numbers produced a striking result. The home price in his analysis increased from $39,550 to $339,736, while the amount of gold required to equal that price fell from roughly 280 ounces to 82.
Dennis used the comparison to show how differently 50 years of rising home prices can look when they aren’t measured only in dollars. His analysis also looked at purchasing power, income and affordability.
Rather than revisit his gold analysis, it left me wondering about something we talk about in real estate all the time: appreciation. We routinely describe the increase between what someone paid for a house and what it’s worth today as appreciation. That’s perfectly legitimate in nominal dollars, but I wanted to know what 50 years of St. Louis home appreciation looked like after accounting for inflation.
For that, I turned to the Federal Housing Finance Agency’s House Price Index. FHFA measures average price changes using repeat transactions involving the same single-family properties. That makes it useful for looking at changes in home values over long periods without relying simply on the median prices of whatever homes happened to sell in a particular year.
The St. Louis metropolitan-area index goes back to 1975. Over the next 50 years, the index increased more than eightfold.
FHFA doesn’t adjust its House Price Index for inflation. The agency points to the Consumer Price Index excluding shelter as one way to make that adjustment. That’s particularly useful here because including shelter in our inflation measure would mean using housing costs as part of the yardstick we’re using to evaluate housing.
When I compared the two, inflation accounted for a substantial portion of the increase in St. Louis home values, but not all of it. After adjusting for the change in consumer prices excluding shelter, St. Louis home values increased roughly 65 percent between 1975 and 2025.
That’s real appreciation, and it’s a different number from the one most of us have in mind when we think about what our homes have gained in value.
Consider a homeowner who bought for $100,000 and eventually sold for $300,000. The home’s nominal appreciation is $200,000, and there is nothing incorrect about describing it that way. But those $300,000 don’t necessarily have three times the purchasing power the original $100,000 had. To understand the increase in purchasing power, inflation has to enter the calculation.
I think that’s the part we tend to leave out of casual conversations about home appreciation. We remember what we paid. We know what the house could sell for today. The difference can be enormous after enough years have passed, and it’s easy to see the entire increase as wealth created by the house.
The St. Louis data tell a more nuanced story. Over this 50-year period, homeowners saw both rising nominal home values and appreciation beyond inflation. The inflation-adjusted increase is much smaller than the nominal increase, but it represents something important: St. Louis home values gained purchasing power beyond the decline in the value of the dollar.
None of this tells us whether a house is affordable today. That’s a separate calculation involving income, mortgage rates, taxes, insurance and other costs of ownership. A property can appreciate in real terms while becoming more difficult for a particular household to buy.
Dennis’s gold comparison is what made me curious about all of this. I don’t think gold reveals the one “true” value of a house, but seeing the same 50 years look so different when measured in something other than dollars made me wonder what would happen if I adjusted St. Louis home values for inflation instead.
The result is pretty good news for St. Louis homeowners. Home values didn’t simply rise because everything costs more than it did in 1975. Even after accounting for inflation, St. Louis homes gained roughly 65 percent in value over those 50 years.
So yes, your house may be worth a lot more than you paid for it. Some of that is because dollars don’t buy what they used to. But here in St. Louis, the house gained ground too.
Karen Moeller
STLKaren.com
Karen.McNeill@STLRE.com
314.678.7866
About the Author:
Karen Moeller is a St. Louis area REALTOR® with MORE, REALTORS® and a regular contributor to St. Louis Real Estate News, helping clients make informed, data-driven decisions.
