I am surrounded by boomers saying this that in their day interest rates were at 15% and we have it easy! I’m also surrounded by the younger generations saying this is ‘not the same thing’
Explain to me the reasoning…
In: 233
Here to help put into perspective.
In 2017, the median housing price for a single family home in my city was $750,000.
Today, in 2023, it is $1,300,000.
1) Year: 2017. $750,000 house @ 2.5% interest rate. $3,300/month payments over a 25 year plan. Our province’s average net-salary was $60,000. You would need a yearly gross income of $140,000 to finance this.
2) Year: 2023. $1,300,000 house @ 6.5% interest rate. $8,700/month payments over a 25 year plan. Average net-salary is currently $68,000. You need a yearly gross income of $420,000 to afford this…
You first might think, holy shit! Almost triple the income for the exact same house?! It gets worse.
Back to 1) Your total interest payments comes to $257,000, making the final cost at the end ~$1,000,000.
2) Your total interest payments comes to $1,300,000, making the final cost at the end ~$2,600,000.
In the last 6 years, you now will owe the bank 1.6 million dollars MORE, for the exact same house, if purchased now vs 6 years ago. This isn’t even “oh, back in 1980 vs now” thing. We’re talking the last SIX YEARS. Let that sink in. This doesn’t even factor in the quickly rising costs of EVERYTHING, from groceries, gas, insurance… When people say the new generation is fucked, this is why. Nobody will afford anything. Good luck!
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