How did middle class/lower class people afford to build houses?

[Dan]

While this is certainly the way to develop in an affordable manner, construction costs and land costs continue to drive higher prices even on smaller lots in the urbanized area. The response we see here to try and reach this moderate and lower income market (those on the verge of middle class status) is to develop at the urban edge, bring down the land costs (both by buying at the edge and by developing surprisingly small lots) and build at large scales to take advantage of economies of scale.But in this climate, that's a big gamble, too, as homes are not selling at a very fast rate. And, of course, we know that there are hidden costs in this approach as well that are borne by the buyer.

Economies of scale in production housing are a thing of the past throughout much of the Rust Belt. In smaller metros, the days of building houses by the thousands in postwar suburbia have long past. National homebuilders, with the exception of Ryan, steer clear of smaller Rust Belt metros. In the Buffalo area, there's Ryan, and tens of local mom-and-pop builders (Forbes Capretto, Marrano, Natale, Mordeno, etc). No Pulte, Beazer, Toll Brothers, Ryland, Centex, DR Horton, etc. Subdivisions are much smaller, and even a 50 lot subdivision will take several years to be built out.

Example:

Ryan "Florence" in suburban Cleveland - 1,952'^2, starting in the low $150s
Ryan "Florence" in suburban Rochester - 1,952'^2, starting in the low $180s
Ryan "Florience" in suburban Syracuse - 1,952'^2, starting in the low $190s.
Ryan "Florence" in suburban Buffalo - 1,952'^2, starting in the low $230s

[PennPlanner]

Speaking of housing affordability away from the coasts I saw a couple episodes on HGTV featuring first time homebuyers. These people were paying sub 150K for comfortably sized houses in Pittsburgh, Nashville and St. Louis. The Pittsburgh couple were even quibbling whether to bid 100K or go up to as much as, gasp, 110K! The house in question was a solidly built brick four square with four bedrooms in what looked like a perfectly decent neighborhood.

I have two friends who in the last six months moved to Denver from the east coast and they bought perfectly pleasant, ~2500sqft houses on suburban cul de sacs with good schools for between 250K and 300.

People living on the coasts are in denial about how expensive housing is relative to the rest of America. If you want to stay in New York or California or Washington, that's the price you will need to pay. But if you're willing to migrate to a mid-tier city in the heartlands, the mountain west or the South you will find much more affordable housing.