BobS
I suggest that for the first half of the 20th century, investors did not build inflationary expectations into their investment decisions. Deflation was a HUGE problem for most of the period up to WWII. The assumption throughout the war was that we would return to a depression after the war’s end. Accordingly, anyone owning rental real estate had to get cash flow to offset the (probably) declining asset price.
By the mid-1960s and thereafter inflation took hold with a vengance. Investors in real estate now were parking their money in a growing asset, so rents could become a smaller % of the long run expected return.
Also, as has been mentioned, financing innovations and increased leverage over the decades played a big part. In the 1920s, home loans were rare and short in duration.
