Quote:
Originally Posted by CliffFletcher
Housing is bad atm. But as opendoor has shown, it wasn't until the covid surge that housing became less affordable than it was in the early 80s.
|
There are of course some caveats with that. That was strictly comparing the mortgage payment on the average house vs. median wages through time. It's important to keep in mind that:
1) The early '80s was not the norm. Outside of that point and the 1989-1991 period, housing has always been more affordable than it has been the last 5 years, sometimes significantly so.
2) The unaffordability then was driven by high interest rates, not high prices, so it wasn't as hopeless as it may seem now. When you could buy a house for 2-3 years' salary, a good saver working the average job could buckle down and make it happen regardless of what interest rates were doing. Now that houses are 7-8x the median income, it's a lot tougher with less room for error. For instance, in some cities, it would take as long to save up to buy a house for cash in the early '80s as it would to save up for just the down payment now.
The point of the comparison isn't to show that current housing is affordable, but rather that we've been where we are now before and it has corrected over time through stagnant prices and inflation.
