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Comment by RocketOne | Hacker News Reader

I think that was the point. There are many markets that are overheated and it was time to turn down the temperature. 5% should help. (We lived through 18% in the 80's. This is barely tapping the brakes.)

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Yes, but unlike the 1980s we've been underbuilding housing since the 90s. There were also more first-time buyer incentives available in the 1980s.

Exactly that - it's not clear how interest raises in a time of shortage will do something about the shortage. If anything, they discourage investment.

And what's with buyer incentives? They are just a conduit from the taxpayer to Big Finance.

At the same time, the higher interest rate will causes existing home-owners to "stay put" rather than jump to another home and pay 5% (unless they are down-sizing and able to make a cash offer).

So the supply problem is not addressed.

Might make new construction cheaper though?

Yes but it was 18% of a much a smaller amount. In terms of potatoes or shoes the amount of interest they were paying back then was probably the same.

In the 80's a much smaller chunk of paycheck went into housing.

Not really.

https://www.brookings.edu/wp-content/uploads/2016/08/where_d...

Percent of income spent on housing for low income households went from 35% (1984) to 41% (2014).

So higher, yes, but it wasn’t “much smaller”.

I’d love to see the stats today or closer to today. Prices have skyrocketed since 2014.

Sure but current prices in many areas have only returned to their 2007 peak.

What these stats often miss, including this one at a glance, is that they're looking at average housing cost across the entire country. Housing in Detroit is definitely a lot cheaper than it was 20 years ago, but in Seattle and Portland and Denver and places people actually want to live, it's soared. These stats also often don't address how many people in a household are working and how that's changed over time. There's a lot more dual incomes for a "household budget" in 2014 than there was in 1984. If your household income has nearly doubled, and you're going from 35% of your household budget to 41%, this could mean the cost of housing has actually doubled or more.

35 % on a single income vs 41 % on a double income. That's "antifragile", as they say, an unsafe position to be in, especially when the next recession is on the doorstep.

Me? Trying to find a property to buy in Western Massachusetts that's affordable on one income. Not looking good.

You think most families were single income in the 80’s?

Women entering the workforce happened mostly by the late 70’s.

Lots of headroom left on the 1970's, prices are set at the margin: https://fred.stlouisfed.org/series/LNU01300002

Housing prices on the other hand - mostly stable until the 1980's, and then shelter became an investment vehicle: https://fred.stlouisfed.org/series/LNU01300002

The prediction is that we will have a period of monetary inflation to deal with the problem of asset inflation.

My point stands. The vast majority of households were dual income in 1984. Since then house expenses have only increase by 5%.

The real issue is people in HCOL cities think their experience is the same across America.

Plenty of places in the US where housing is still affordable.

What kind of salary can you get in LCOL cities, and will you have to move when you change jobs? The withdrawal from the countryside has been ongoing for a long time. In the 1980's one might have joined Dow in Midland, MI or Upjohn in Kalamazoo, and expected to retire with them. Nowadays, job tenures are short, and one would think that this is reflected in demand.

You realize the Upjohn plant in Kalamazoo is now Pfizer's largest manufacturing site in the US? They actually did the final packaging of their Covid vaccine there.

I have a friend who has worked there for 20 years. He's not making Bay area wages, but he also bought his house for $150k a decade ago (houses are now ~$250k). Public schools are great.

There is no way to "have your cake and eat it too". Large cities are expensive because that's where people want to live and wages are high. In exchange housing is highly priced.

There are plenty of smaller cities with affordable housing. Sure, you might be limited to a handful of employers and yeah, your wages will never be at coastal levels, but that's the trade off.

Now that speculators have driven up prices while interest was and money printers went brrr, time to drive up the interest.

And we should be happy to have been born after others earned all the wealth.

https://youtu.be/bUl5rSpfCeI

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