Quote:
Originally Posted by opendoor
I'm assuming you're joking about the 23% interest rate in 1987, unless they were borrowing from a loan shark. But just to put some numbers into that to compare to today using the prevailing interest rates at the time:
$30K in 1977 = $135K today = $1,085 mortgage in 2022 dollars (w/ 10% down)
$90K in 1987 = $199K today = $1,765 mortgage in 2022 dollars (w/ 10% down)
With a 3.5% mortgage, the equivalent house prices based on those mortgage amounts would be and $240K and $390K respectively (again, assuming 10% down). So pretty affordable, assuming those houses were anywhere near an urban area.
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On top of that you were getting a massive return on any investments you had. If you saved up a 20% downpayment in 1977, within a few years (assuming saving an additional $5k or so a year), you probably had a 50% downpayment.
Today, you save 20%, and that becomes a 10% downpayment in 5 years, as the rising prices far outpace anyone's ability to save or earn investment income.
The lawyer, I used to work with, used his first pay cheque as the downpayment for the strip mall where his office is currently located....nowadays new entires into the workforce are probably using at least half their pay cheque for rent.