In 1981, the average 30 year fixed rate mortgage carried a rate of ~18%.
https://www.rocketmortgage.com/learn/historical-mortgage-rat....
https://www.rocketmortgage.com/learn/historical-mortgage-rat....
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.
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.
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.
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.
I should include that on his salary he was also raising two children, could afford for us to see the doctor/dentist on a regular basis, owned a car outright while my mother stayed home to raise the kids.
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.
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.
With inflation, layoffs, and lack of union representation, I suspect software engineering median salaries outside major hubs to stagnate rapidly.
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.