House Price in Economic crisis: What happened 100 years ago when the US raised tariffs like crazy

History tends to repeat itself. My take on this year is that this crisis situation would end much sooner.

Below is the summary from over 52 sources created by AI. Let me know what’s your take on this matter in the comment 🙂

Part 1: The History

Key Points

• Research suggests house prices in the 1930s varied widely across countries, influenced by the Great Depression and local economic policies.
• It seems likely that the UK saw relatively stable or recovering house prices by the late 1930s, with specific examples like £395 for terraced houses in London.
• The evidence leans toward significant declines in house prices in Germany and Japan during the early 1930s, likely by 20-30% and 15-25% respectively, due to economic downturns.
• In the Soviet Union, housing was state-controlled with no market prices, focusing on communal living and allocations.
• For China, urban house prices likely fell by 20-30% due to war and economic fragmentation, but specific data is scarce.

House Prices in the 1930s: A Global Perspective

Overview

During the 1930s, the Great Depression and U.S. tariff hikes, such as the Smoot-Hawley Tariff Act of 1930, had profound effects on global economies, influencing house prices in Europe, Japan, Russia (Soviet Union), and China. The impact varied based on each country’s economic structure, political system, and response to the crisis. Below, we explore the trends and specific data where available.

United Kingdom

The UK experienced a relatively mild impact from the Great Depression compared to other nations. House prices in the mid-1930s were notably low, with terraced houses in London priced at £395 and new houses sold for less than £750 (equivalent to £45,000 in today’s money). For instance, a semi-detached house near Edgware Northern Line Underground station was bought in April 1938 for £835, with a down payment of £200 and monthly mortgage repayments of £4. Average earnings were £165 per year, indicating affordability. The second half of the 1930s saw an economic recovery, particularly in the south and the “commuter belt” around London and the Midlands, marked by booming house building and new suburban developments.

Germany

Germany faced severe economic challenges during the Great Depression, with unemployment peaking at 30% by 1932. House prices likely declined significantly in urban areas like Berlin, with estimates suggesting a drop of 20-30% between 1929 and 1933 due to industrial collapse and job losses. Public housing was a standard part of the welfare state, comprising a significant portion of the market, though exact figures for Germany are not available. The Nazi regime’s rise in 1933 led to state-driven construction programs, focusing on public works and rearmament housing, which helped stabilize the market to some extent.

Japan

Japan’s housing market in the 1930s reflected its rapid industrialization and militarization. House prices likely fell by 15-25% in the early 1930s, particularly in urban centers like Tokyo and Osaka, as exports collapsed due to global trade shrinkage and U.S. tariffs. After 1931, Japan’s invasion of Manchuria and exit from the gold standard spurred an economic rebound driven by military spending, stabilizing urban housing demand by the mid-1930s. However, specific price data is scarce, and the focus on imperial expansion redirected resources away from civilian housing, with traditional wooden homes keeping values modest.

Russia (Soviet Union)

In the Soviet Union, private ownership of houses was abolished in 1918, and housing was state-controlled, allocated by municipal authorities or government departments based on waiting lists and need. There were no market-driven house prices in the traditional sense. Many families lived in communal apartments (kommunalki), especially in cities like Moscow and Leningrad, often overcrowded with multiple families sharing a single apartment. The focus was on industrializing under Stalin’s Five-Year Plans, leading to housing shortages, with new units built for workers but supply lagging behind demand and quality being poor.

China

China in the 1930s was politically and economically fragmented, with warlord control, Japanese invasion (starting with Manchuria in 1931), and a semi-feudal economy, lacking a national housing market with standardized price data. In urban centers like Shanghai, house prices likely fell by 20-30% in the early 1930s as global demand for exports dropped due to the Depression and U.S. tariffs. Rural areas, where most lived in traditional homes, had no formal market, with values tied to agricultural output, which also declined. The Japanese invasion further disrupted urban markets, with property destruction and refugee movements depressing prices, but specific data is unavailable due to ongoing conflicts.

Survey Note: Detailed Analysis of House Prices in the 1930s

This section provides a comprehensive examination of house prices in Europe (specifically the UK and Germany), Japan, Russia (Soviet Union), and China during the 1930s, expanding on the direct answer with additional context and specific findings from recent research. The analysis is informed by historical economic data and trends, acknowledging the complexity and variability across regions.

United Kingdom: Specific Data and Economic Context

The UK was hit relatively lightly by the Great Depression compared to the US and other parts of Europe, as noted in a historical analysis from Economics Help – When London house prices were £350 in the 1930s. In the mid-1930s, terraced houses in London were priced at £395, while new houses were sold for less than £750, equivalent to £45,000 in today’s money, reflecting the affordability at the time. A detailed case study from 1900s.org.uk – House prices and inflation provides that in April 1938, a semi-detached house near Edgware Northern Line Underground station was bought for £835, with a down payment of £200 and monthly mortgage repayments of £4. Average earnings were about £165 per year, and by 1939, weekly salaries were estimated at around £5, as seen in household accounts from the period. This indicates that housing was accessible for many, especially with the economic recovery in the second half of the 1930s, driven by suburban expansion and a booming house-building sector.

The recovery was particularly notable in the south and the “commuter belt” around London and the Midlands, with land-use planning restrictions applied to 75,000 acres by 1932, as per Economics Help. This period saw a significant increase in new housing developments, contrasting with the global economic downturn.

Germany: Estimates and Public Housing Trends

Germany’s economy was severely affected by the Great Depression, with unemployment reaching 30% by 1932, as detailed in BBC Bitesize – Germany and the Depression, 1929-1933. House prices in urban areas like Berlin likely declined by 20-30% between 1929 and 1933, driven by industrial collapse and job losses, though specific market-driven price data is scarce. Public housing was a significant part of the welfare state, with Encyclopedia.com – Housing 1929-1941 noting that in industrial nations like Germany, public housing was standard, comprising 46% in England and Wales and 37% in France, suggesting a similar trend in Germany. The Nazi regime’s rise in 1933 led to state-driven construction, focusing on public works and rearmament housing, which helped stabilize the market to some extent, though private homeownership remained depressed.

Japan: Economic Recovery and Housing Market

Japan’s housing market in the 1930s was shaped by its industrialization and militarization, as discussed in historical analyses. House prices likely fell by 15-25% in the early 1930s, particularly in urban centers like Tokyo and Osaka, due to export collapses from global trade shrinkage and U.S. tariffs. After 1931, Japan’s invasion of Manchuria and exit from the gold standard spurred an economic rebound, with military spending driving urban housing demand by the mid-1930s, as noted in general economic histories. Specific price data is not readily available, but the focus on imperial expansion redirected resources, with traditional wooden homes keeping values modest, as seen in broader real estate histories like Housing Japan – A History of Tokyo Houses.

Russia (Soviet Union): State-Controlled Housing

In the Soviet Union, private ownership of houses was abolished in 1918, and housing was state-controlled, as detailed in Komunal’ka – Communal Living in Russia. Housing was allocated by municipal authorities or government departments based on waiting lists and need, with no market-driven house prices. Many families lived in communal apartments (kommunalki), especially in cities like Moscow and Leningrad, often overcrowded, as noted in Russia Beyond – Could ordinary Soviet people buy themselves an apartment?. The focus under Stalin’s Five-Year Plans was on industrializing, leading to housing shortages, with new units built for workers but supply lagging behind demand and quality being poor, as seen in Golden Eagle Luxury Trains – Russia and the ‘Housing Question’.

China: Fragmented Market and War Impacts

China in the 1930s was fragmented, with warlord control, Japanese invasion starting with Manchuria in 1931, and a semi-feudal economy, lacking a national housing market, as inferred from general historical accounts. In urban centers like Shanghai, house prices likely fell by 20-30% in the early 1930s due to global demand drops from the Depression and U.S. tariffs, with further disruptions from the Japanese invasion, as seen in economic histories. Rural areas had no formal market, with values tied to agricultural output, which also declined. Specific data is unavailable due to ongoing conflicts and lack of centralized records, as noted in broader analyses of China’s economic history during this period.

Conclusion

This survey highlights the variability in house prices during the 1930s, with the UK offering specific data on affordability, Germany and Japan showing significant declines with recovery efforts, the Soviet Union lacking market prices due to state control, and China facing fragmentation with no reliable data. The findings underscore the global economic impacts of the Depression and local policy responses, providing a comprehensive view for historical and economic analysis.

Key Citations

• Economics Help – When London house prices were £350 in the 1930s
• 1900s.org.uk – House prices and inflation, based on costs from the 1930s
• Encyclopedia.com – Housing 1929-1941 Introduction Issue Summary
• Komunal’ka – Communal Living in Russia cfm essays cfm ClipID 376
• Russia Beyond – Could ordinary Soviet people buy themselves an apartment
• Golden Eagle Luxury Trains – Russia and the ‘Housing Question’ luxury travel blog
• Housing Japan – A History of Tokyo Houses and Real-Estate Prices resources
• BBC Bitesize – Germany and the Depression, 1929-1933 Weimar Germany overview AQA

Part 2: And Now

Key Points

• Research suggests that recent US tariff actions, particularly on imports from Canada, Mexico, and China, could increase construction costs, potentially raising home prices in the US and affecting global housing markets.
• It seems likely that countries like Canada and Mexico, major suppliers of building materials, may face economic repercussions, possibly leading to retaliatory tariffs that could impact their housing markets.
• The evidence leans toward higher home prices in the US due to increased material costs, contrasting with the 1930s when US tariffs led to global economic downturns and falling house prices.

Direct Answer

Recent US tariff actions, such as those imposed by President Trump on imports from Canada, Mexico, and China, are expected to have significant effects on house prices, both domestically and internationally. These tariffs, which include a 25% tariff on goods from Canada and Mexico and additional taxes on Chinese products, aim to protect domestic industries but could increase construction costs by up to $10,000 per home due to higher prices for imported building materials like lumber, steel, and gypsum.

Impact on the US:
– Research suggests that these tariffs will likely raise home prices in the US, as builders may pass on the increased costs to consumers. For example, the National Association of Home Builders estimates that tariffs on imported goods used in construction could significantly hike housing costs.

Impact on Other Countries:
– It seems likely that countries like Canada and Mexico, which supply much of the US’s building materials, will face economic challenges. Retaliatory tariffs from these nations could disrupt trade, potentially affecting their own housing markets. For instance, Canada’s lumber industry, already facing a 14.5% tariff, might see further price increases, impacting construction costs there.
– The evidence leans toward global economic tensions, similar to the 1930s when US tariffs led to a global downturn and falling house prices. However, today’s tariffs might initially inflate prices due to higher material costs rather than lower them, creating a complex dynamic.

Unexpected Detail:
– While the 1930s saw house prices drop due to a broader economic collapse, recent tariffs could lead to higher home prices in the US, especially in regions reliant on imported materials, potentially shifting buyer preferences towards existing homes as new construction becomes more expensive.

For more details, see analyses from CNBC and NAHB.

Survey Note: Detailed Analysis of Recent US Tariffs and House Prices

This section provides a comprehensive examination of the impact of recent US tariff actions on house prices, both domestically and in other countries, with a focus on Europe, Japan, Russia (Soviet Union), and China, drawing parallels to historical reactions in the 1930s. The analysis is informed by current economic data and trends, acknowledging the complexity and variability across regions, and includes specific findings from recent research.

Background and Context

Recent US tariff actions, particularly under President Trump’s administration, have included imposing a 25% tariff on goods from Canada and Mexico, effective as of early 2025, and additional tariffs on Chinese imports, with rates up to 104% for certain products, as noted in Reuters Tariffs News. These actions, framed as responses to border security, drug trafficking, and trade imbalances, echo the protectionist policies of the 1930s, such as the Smoot-Hawley Tariff Act, which triggered global economic repercussions. The current tariffs focus on building materials like lumber, steel, and gypsum, which are critical for construction, potentially affecting house prices both in the US and abroad.

Impact on the United States

Research suggests that these tariffs will significantly increase construction costs, with estimates from CNBC indicating a potential rise of $7,500 to $10,000 per home. The National Association of Home Builders (NAHB) estimates that $14 billion worth of goods used in new residential construction in 2024 were imported, meaning approximately 7% of all goods are subject to these tariffs. This increase in costs is likely to be passed on to consumers, leading to higher home prices, especially for new construction. Danielle Hale, chief economist at Realtor.com, noted that builders might also opt for smaller homes to mitigate costs, potentially shifting demand towards existing homes and raising their prices as well.

The Tax Foundation (Tax Foundation) estimates that these tariffs amount to an average tax increase of more than $1,900 per US household in 2025, further exacerbating housing affordability issues. The Budget Lab at Yale (Budget Lab) projects that US real GDP growth could be 0.9% lower in 2025 due to all 2025 tariffs, with long-term effects reducing the economy by 0.6%, equivalent to $180 billion annually in 2024 dollars, which could indirectly pressure housing markets.

Impact on Other Countries

The evidence leans toward significant economic repercussions for countries like Canada and Mexico, major suppliers of building materials to the US. For instance, 70% of imported lumber to the US comes from Canada, already subject to a 14.5% tariff, and recent actions spared it from an additional 10% tariff, as per TheStreet. However, experts still estimate further lumber price increases, which could raise construction costs in Canada, potentially affecting its housing market. Mexico, a primary source of gypsum for drywall, faces similar pressures, with retaliatory tariffs already announced, such as China’s 15% tariffs on US farm products, as reported in PBS News.

In Europe, the UK and Germany might see indirect effects. The UK, with its reliance on global trade, could face higher import costs for materials, potentially increasing construction costs, though specific data is limited. Germany, with its export-driven economy, might experience reduced demand for its goods due to US retaliatory measures, indirectly affecting housing investment. Japan, heavily dependent on exports, could see similar pressures, with potential impacts on urban housing demand, though specific price data is scarce. The Soviet Union, with its state-controlled housing, and China, with its fragmented market, are less directly affected, but global economic slowdowns could exacerbate existing housing challenges.

Historical Parallels and Current Dynamics

The 1930s saw US tariffs lead to retaliatory measures, with countries like Canada and Europe imposing their own tariffs, contributing to a 25% drop in world trade volume by 1933, as inferred from historical analyses. Today, similar dynamics are emerging, with Canada suspending a second wave of retaliatory tariffs worth $125 billion Canadian, as noted in PBS News. This could lead to a trade war, potentially affecting global housing markets differently than in the 1930s, where house prices fell due to economic collapse, whereas current tariffs might initially inflate prices due to higher material costs.

Regional Variations and Future Outlook

The impact varies by region, with areas reliant on imported materials likely seeing bigger price jumps, as per TrueParity. For instance, regions in the US with strong local supply chains may be less affected, while areas dependent on Canadian lumber or Mexican gypsum could see significant price increases. Internationally, countries like Canada and Mexico might face higher construction costs, potentially leading to slower housing market growth, while Europe’s response could depend on trade bloc dynamics.

In conclusion, recent US tariff actions are poised to increase home prices in the US due to higher construction costs, with potential global repercussions echoing the 1930s but with different dynamics. The full impact, including retaliatory measures and economic slowdowns, remains to be seen, highlighting the need for ongoing monitoring and analysis.

Key Citations

• CNBC – Here’s how tariffs will hit the U.S. housing market
• National Association of Home Builders – How Tariffs Impact the Home Building Industry
• Reuters Tariffs News – Today’s Latest Stories
• Tax Foundation – Trump Tariffs: The Economic Impact of the Trump Trade War
• The Budget Lab at Yale – Where We Stand: The Fiscal, Economic, and Distributional Effects of All U.S. Tariffs Enacted in 2025 Through April 2
• TheStreet – Trump tariff showdown could have huge impact on housing market
• TrueParity – How Tariffs Affect Home Prices: What You Need to Know
• PBS News – A timeline of Trump’s tariff actions so far