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
I bought my first home for 155 @ 6.5% Jan 2007. I was making just over $16 an hour. My payment was 1200 I believe. I just sold it last year for 400k.
Because wages have stagnated for over a decade. Mix that interest rates now and we’re way worse than those greedy assholes were.
An interest rate of 13% is worse than one of 7%, almost twice as bad. You understand that correctly. When people are saying it’s not the same thing, they are talking about home prices being much, much higher than wages were years ago. So much higher that even a lower interest rate makes a home purchase more expensive than it used to be.
It’s going to be a lot more complicated than you’ll see on reddit.
Boomers had 25 yrs from 1975-2000 or so where 8-10% rates (or more) were normalized followed by 20 years where rates just kept going lower and lower (likely after they bought)….so a recent spike doesn’t resonate yet. A 7% interest rate just doesn’t ‘sound’ high compared to what they grew up with.
The high rates of the 70s and 80s were also often accompanied by high unemployment and economic uncertainty. The energy crises was severe, and while interest rates nudged 20% for just a short while, the uncertainty around that was wide reaching. They don’t understand your struggles, and you, likely, don’t understand theirs. Nobody likes hearing they ‘had it easy.’ especially by someone who isn’t going through, or didn’t go through the same things they did. Boomers don’t like it, and younger generations don’t like it either.
There was a tweet being reposted on reddit about how things are so much harder for generations today than they were in the 1930s recession – complete with calculations of home price to income ratios. Not true . And if anyone is saying you have it easy now with regard to housing that’s simply incredibly wrong too.
If you want to convince someone older, show them the math on current prices — payments/income needed etc — especially for a home they may be currently living in. You can leave out the bit on them having had it easy as that’s a challenge to the struggles they’ve gone though. They’ll see the math.
House prices are in the sillysphere in so many many places. Especially where people starting out want to live. I guess they’re much less inflated in places with economic uncertainty than that in places with higher paying, more secure jobs. They don’t seem to be adjusting to current interest rates. Either rates, or prices should adjust over time, I suppose. Though with real estate it seems to be anyones guess as to what will happen.
TLDR: They had struggles you may not recognize, and if they’re saying it’s easy now to buy a home they’re simply wrong. Just show them the current income/payments if they insists it’s easy today.
Most boomers are lost into their own echo chambers right now. They do not comprehend what minimum wage should be based on inflation from a 50s POV. They don’t realize that their grandparents/parents in the silent generation set their futures up 20-40 years before hand and set high tax rates coupled with WW2’s aftermath to make Americas working class so powerful. They think they did it and they didn’t do shit. Their parents and grandparents did and they just benefitted from it and never trickled it down, even to their own families.
My IL’s on wife’s side are totally fine with the we got it, you don’t have it, even though we are family. The cucks live on the water with ocean access in S. Florida and this is what they believe and support. They give 0 fucks. Conservative fuck holes is what they are. We got ours so fuck you types. That’s what all of us non boomer’s got to deal with. We are fucked until all the boomer are fucking dead and out of the work pool, and even then, we are still fucked until we come together as a singular American union and bring this economy to a halt and achieve our demands.
The answer lies in the hyperbolic curve. Changes closer to the lower bound are going to be a lot more significant to valuations than changes at a higher point.
Because wage growth hasn’t kept up with housing prices. In Australia, where I am, for example, in 1990, when interest rates were 17%, the average mortgage repayment was 44.49% of the average monthly salary. As of March ,at 3.35%, the average mortgage repayment is 44.9% of the average income.
Bear in mind salaries were a lot lower 40-50 years ago. In the 80s a 13% mortgage rare was the norm. I didn’t even know a bank would allow you to buy a house without a 20% down payment. Don’t you have to get a CMHC special insurance if you don’t have a 20% down payment? Why do ppl think buying is always the right way? There are many valid reasons to support renting instead.
I lose a finger.
– Bah, that’s nothing! I’ve lost a finger too!
(He has 9 fingers left)
(I have 0)
They are both wrong. It’s not as bad as the young crowd wants to make it sound. It’s not as good as the boomers want to believe it is.
Owning a house is entirely attainable for most working professionals, especially dual income white collar families. But that comes with some compromise that a lot of the younger college educated crowd isn’t willing to make… Relocating away from the big cities with lots to do in favor of smaller cities that don’t have as much to offer and buying older houses, maybe relocating to a different state, dealing with snow, etc.
In the meantime I know 25-39 year old mechanics here in the mid-sized city Midwest that came from dirt and have been stacking up their property portfolios the last few years.
On the other hand, every dollar earned doesn’t pay for as much house as it used to. In addition, a family has far more expenses than what the older crowd had decades ago. Cell phones and cellphone plans for the family, home internet, laptops or tablets for the kids, computers; cars are far more expensive comparatively, both due to all the tech and increased safety standards. Childcare has gotten mindbogglingly expensive. Getting a new job or a raise is no longer as simple as giving someone a resume and a firm handshake. Boomers don’t get how much more expensive it is to raise a family now.
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