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In 1981, the average 30 year fixed rate mortgage carried a rate of ~18%. https://www.rocketmortgage.com/learn/historical-mortgage-rates-30-year-fixed#:~:text=3

In 1981, the average 30 year fixed rate mortgage carried a rate of ~18%. https://www.rocketmortgage.com/learn/historical-mortgage-rates-30-year-fixed#:~:text=3.11%25%20for%202020.-,What%20were%20the%20highest%20mortgage%20rates%20in%20history%3F,highest%20annual%20average%20at%2016.63%25 https://www.rocketmortgage.com/learn/historical-mortgage-rat....

alephnerd 2y ago
House prices were also much lower back then, but that only proves (what I assume is) your point - we can't view the past with rose tinted glasses. The American Dream was always aspirational and took grit and effort and was never attainable for 15-30% of the country due to their skin color or ethnic origins until precedent against redlining took hold by the 1980s. IMO, I'm fine with us keeping high interest rates if it forces a rebalancing of prices long term. It's not like low interest rates would help affordability anyhow, as it's only us white collar workers in high paying fields like Tech, Finance, etc that have the dry powder to execute on purchases.
- spondylosaurus 2y ago
  I agree that higher interest is a worthwhile trade-off if actual prices come down, but to your last point, don't low interest rates benefit some marginal buyers by (1) lowering the monthly payment and (2) making it more appealing to put minimum down? Granted, even minimum down is out of reach for too many people, but I feel like "if only we could afford the down payment, we could definitely afford the mortgage..." is a relatively common lament. And sometimes those lamenters don't realize you can/should put down 5% instead of 5-20%, circumstances permitting.
- ben_jones 2y ago
  > it's only us white collar workers in high paying fields like Tech, Finance, etc that have the dry powder to execute on purchases With inflation, layoffs, and lack of union representation, I suspect software engineering median salaries outside major hubs to stagnate rapidly.
- oceanplexian 2y ago
  > IMO, I'm fine with us keeping high interest rates if it forces a rebalancing of prices long term. House prices are still sticky and high interest rates haven't rebalanced anything. Houses are 50%+ less affordable on a month-to-month basis, and housing prices are stable or increasing. If you use critical thinking, it's obvious that inflation is still present and interest rates are masking the inflation. If rates decrease even slightly (Which will ultimately be required due to the ticking time bomb of the government defaulting on the debt and banking system collapse) prices are going to skyrocket. The real problem is that we printed trillions of dollars. That has to come from somewhere no matter how much you fiddle with the interest rates. And that "somewhere" is directly out of the pockets of the middle class.
Teever 2y ago
As a Canadian it's like deja vu watching these comments play out about this subject. I swear to god I've seen these entire threads verbatim on Canadian subreddits over the past few years as the prices keep rising, rising, rising and no one, not politicians, not central bankers, not construction companies seem to be able to solve the problem. I don't know what's going to happen but it's far too late for us and it's probably too late for you. Things are going to keep getting more and more expensive while some people online are going to swear up and down that they're not and the economy will grind to a halt because people literally can't afford to go to work.
toomuchtodo 2y ago
https://wolfstreet.com/2024/05/28/the-most-splendid-housing-bubbles-in-america-april-2024-update-biggest-price-drops-from-2022-peak-in-san-francisco-seattle-phoenix-portland-denver-las-vegas-dallas/ https://wolfstreet.com/2024/05/28/the-most-splendid-housing-... https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA
StanislavPetrov 2y ago
In 1981 my father bought 3-bedroom home in the suburbs for about 2x the annual salary of his blue collar job. The same home today costs more than 12x the annual salary of the exact same blue collar job.
- stufffer 2y ago
  The Simpsons started playing on TV in 1989. Single income family, no college, working low skill blue collar union job. Yet they still owns a large home with a yard. That premise is absurd by modern standards.
- chii 2y ago
  So in the 40 or so years since 1981, has that blue collar job's output as a percentage of global GDP increased, decreased, or remained the same? I would argue that the same blue collar job might've been reduced as a percentage of global output, which means the value creation is lower, and thus, the 12x salary for a house might be justified.
  - StanislavPetrov 2y ago
    >So in the 40 or so years since 1981, has that blue collar job's output as a percentage of global GDP increased, decreased, or remained the same? It is a blue collar government job. Like most government jobs, one could easily argue that the "value created" was zero then and is zero now. In any event, the job remains the same, and salary has risen (more or less) with the official rate of inflation. There is no reasonable argument to be made that the same house that this government worker could buy 40 years ago for 2 years salary should now be worth 24 years salary.
- AnimalMuppet 2y ago
  Sure. Now tell me about his monthly payments on a 30 year mortgage for that same house, as a fraction of his monthly pay, then and now. The demand part of the supply/demand curve on houses is set by monthly payment, not purchase price. Interest rates change the relationship between the two.

alephnerd 2y ago

House prices were also much lower back then, but that only proves (what I assume is) your point - we can't view the past with rose tinted glasses. The American Dream was always aspirational and took grit and effort and was never attainable for 15-30% of the country due to their skin color or ethnic origins until precedent against redlining took hold by the 1980s. IMO, I'm fine with us keeping high interest rates if it forces a rebalancing of prices long term. It's not like low interest rates would help affordability anyhow, as it's only us white collar workers in high paying fields like Tech, Finance, etc that have the dry powder to execute on purchases.

spondylosaurus 2y ago
I agree that higher interest is a worthwhile trade-off if actual prices come down, but to your last point, don't low interest rates benefit some marginal buyers by (1) lowering the monthly payment and (2) making it more appealing to put minimum down? Granted, even minimum down is out of reach for too many people, but I feel like "if only we could afford the down payment, we could definitely afford the mortgage..." is a relatively common lament. And sometimes those lamenters don't realize you can/should put down 5% instead of 5-20%, circumstances permitting.
ben_jones 2y ago
> it's only us white collar workers in high paying fields like Tech, Finance, etc that have the dry powder to execute on purchases With inflation, layoffs, and lack of union representation, I suspect software engineering median salaries outside major hubs to stagnate rapidly.
oceanplexian 2y ago
> IMO, I'm fine with us keeping high interest rates if it forces a rebalancing of prices long term. House prices are still sticky and high interest rates haven't rebalanced anything. Houses are 50%+ less affordable on a month-to-month basis, and housing prices are stable or increasing. If you use critical thinking, it's obvious that inflation is still present and interest rates are masking the inflation. If rates decrease even slightly (Which will ultimately be required due to the ticking time bomb of the government defaulting on the debt and banking system collapse) prices are going to skyrocket. The real problem is that we printed trillions of dollars. That has to come from somewhere no matter how much you fiddle with the interest rates. And that "somewhere" is directly out of the pockets of the middle class.

Teever 2y ago

As a Canadian it's like deja vu watching these comments play out about this subject. I swear to god I've seen these entire threads verbatim on Canadian subreddits over the past few years as the prices keep rising, rising, rising and no one, not politicians, not central bankers, not construction companies seem to be able to solve the problem. I don't know what's going to happen but it's far too late for us and it's probably too late for you. Things are going to keep getting more and more expensive while some people online are going to swear up and down that they're not and the economy will grind to a halt because people literally can't afford to go to work.

toomuchtodo 2y ago

https://wolfstreet.com/2024/05/28/the-most-splendid-housing-bubbles-in-america-april-2024-update-biggest-price-drops-from-2022-peak-in-san-francisco-seattle-phoenix-portland-denver-las-vegas-dallas/ https://wolfstreet.com/2024/05/28/the-most-splendid-housing-... https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA

StanislavPetrov 2y ago

In 1981 my father bought 3-bedroom home in the suburbs for about 2x the annual salary of his blue collar job. The same home today costs more than 12x the annual salary of the exact same blue collar job.

stufffer 2y ago
The Simpsons started playing on TV in 1989. Single income family, no college, working low skill blue collar union job. Yet they still owns a large home with a yard. That premise is absurd by modern standards.
chii 2y ago
So in the 40 or so years since 1981, has that blue collar job's output as a percentage of global GDP increased, decreased, or remained the same? I would argue that the same blue collar job might've been reduced as a percentage of global output, which means the value creation is lower, and thus, the 12x salary for a house might be justified.
- StanislavPetrov 2y ago
  >So in the 40 or so years since 1981, has that blue collar job's output as a percentage of global GDP increased, decreased, or remained the same? It is a blue collar government job. Like most government jobs, one could easily argue that the "value created" was zero then and is zero now. In any event, the job remains the same, and salary has risen (more or less) with the official rate of inflation. There is no reasonable argument to be made that the same house that this government worker could buy 40 years ago for 2 years salary should now be worth 24 years salary.
AnimalMuppet 2y ago
Sure. Now tell me about his monthly payments on a 30 year mortgage for that same house, as a fraction of his monthly pay, then and now. The demand part of the supply/demand curve on houses is set by monthly payment, not purchase price. Interest rates change the relationship between the two.