The housing market is in grim shape. People yearn to buy but are thwarted by rising mortgage rates, unaffordable homes and an inadequate supply of properties for sale.
The hopeful news is that America has been through this before — in 1981 — and things eventually got better. The sobering news is that the early-’80s housing market stayed alive courtesy of some factors that barely exist this time around. We will have to construct a new path out of this mess. The rapid climbs in mortgage rates forced would-be home buyers to skedaddle out of the market. Year-over-year existing home sales plunged 22.3% in 1980 and then another 18.6% in 1981, according to historical data from the National Association of Realtors. This year, the pace of existing home sales dropped 28.4% in the 12 months ending in October, according to the NAR.
A big difference: The role of assumable loans For all the similarities between the 1980s and today, there are key differences. One of them involves “assumable mortgages,” which were plentiful then and are in short supply now. But Congress slammed the door on assumable loans in 1982. Now only a subset of mortgages are readily assumable: those insured or guaranteed by the Federal Housing Administration, the Department of Veterans Affairs and the Department of Agriculture’s Rural Housing Service. Together, FHA, VA and USDA loans accounted for around 18% of mortgage origination volume in the second quarter of 2022, according to data gathered by the Urban Institute.
In most cases, creative financing took the form of loans to buyers from the sellers; for instance, in the form of a promissory note for a certain amount the buyer would pay the seller every month, with the buyer possibly taking out a second mortgage for the remainder of the purchase price. The arrangements had names such as “contract for deed,” “wraparound mortgage” and “lease with an option to buy.
Source: Loan Digest (loandigest.net)
how people bought homes in 1700-1950 with no mortgages Wow, that was wild !
LOL - so you used the cover of 'Desperately Seeking Susan'. I guess that's one way to bring back the 80s.
They were 2 x their incomes, lol. Now they are 10-15 times their incomes.
Homes were less expensive then.
When mortgage rates were that high, you could also get 9-10% in a savings account. Feel the same as getting 0% in a savings account with an 8% mortgage.
Cocaine profits.
Me..
The key: Assumable loans and seller financing.
Simple homes 🏡 we’re cheaper
1985 average home price: $40,000 1985 average salary: $18,000 2022 average home price: $450,000 2022 average salary: $35,000
No, home prices relative to incomes wasn't as crazy as it is now. Literally, a home bought around 1972 for a whopping 70k now goes well over a million. Income hasn't changed to that degree, so it's the BigBank profiteers that use the 'creative financing'.
Voodoo Economics
The average home price to salary back then was also significantly less than it is now
My parents
Easy. For starters, the homes cost waaaaaaay less and it was NOT normal to be living in suburbia with a luxury suv AND a LV.
Land contract loans
They obviously used cash and got the money somewhere else 😆
They cost around $25,000.00. They could have two jobs, costs at Supermarket much lower, gas at around $1.00, no cell phones, cable was around $30.00. Insurance rates much lower. Accountability in government.
Real estate hadn't been monetized yet.
Totally different market conditions compared to now.
This is gaslighting bs trying to make you think rising interest rates are perfectly normal.
Why a stupid question. Homes prices were way cheaper and people made more.
I bought a house in the 80s. 14% mortgage. But the home cost 65K. with 300K homes higher mortgage rates seem un do able.
We put 20% or more down.
Prices were lower.
No in Canada that was typical. My Canada Student Loan was 18.5%
Had a mortgage rate of 12%. But, go ahead and exaggerate…
I bought at 6% then a month later it was 15%. Had to move back with parents and rent it out as my entire wage went on my mortgage. I have heard things are different now and people who are paying 3% rates have it far more difficult
On th 90s I did at 10% was a good rate back then but home prices way lower
Home prices to income ratios are at historic highs. Not the case in the 80's. Risk now is buying at inflated prices and a high rate hoping to refinance when rates fall, but if your home value also drops you may not be able to refinance.
In 1984, I got a 10% ARM that adjusted every 3 years and I was lucky to get it.
Cause they costed nothing compared to income duh
1979 11.75% VA loan, 1986 8.25% conventional
They refinanced to lower rates and the home prices were not as inflated in relation to income as they are now.
The homes are reasonably priced and affordable. They are in line with the wages and salaries of the 80’s.
my first home was with the VA at 10% around 1984
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: fox13seattle - 🏆 328. / 59 Read more »
Source: sdut - 🏆 5. / 95 Read more »
Source: CBSLA - 🏆 552. / 51 Read more »
Source: futurism - 🏆 85. / 68 Read more »
Source: ABC7 - 🏆 67. / 68 Read more »
Source: KPBSnews - 🏆 240. / 63 Read more »