Talk to anyone who managed to buy a home in 2020 or 2021, and they will probably tell you the competition was fierce and the experience miserable. But buyers today face similar, if not tougher, conditions. Inventory is anemic, partly because homeowners do not want to part with their low interest rates. So far, a scant 1 percent of American homes have traded hands this year, the lowest rate in a decade, according to a July report from Redfin.
Of course, things could be worse. In 1981, mortgage rates peaked at a jaw-dropping 18.53 percent. Still, the average home price in the second quarter of 1981 was $84,300 — even adjusted for inflation, that’s about $287,020, which is far less than the average price of $495,100 in the second quarter of 2023.
But people who remember the days of double-digit interest rates are often quick to remind younger generations that they, too, walked to school uphill both ways in the snow.
“The fate, the gods, determine when you enter that phase of your life and what is happening in the market,” said Allen J. Palmer, 85, who is retired from IBM and bought his house in what is now Silicon Valley, in California, in 1977 for $95,000 (or $480,686 in today’s dollars), with an 8.5 percent mortgage interest rate. The first year he and his wife spent in that house, they couldn’t afford to fly home to Milwaukee for the holidays.
Young buyers “don’t understand that this is the way it is,” he said. “They probably don’t remember that their parents struggled to pay” the mortgage, too.
Source: | This article originally belongs to Nytimes.com
