1989 interest rate too high, houses affordable, today interest low,houses not affordable?

Question

In the late 1980's, interest rate was high, yet homes were affordable, my husbane and i and most of our friends all bought our first homes around the same time, we all worked like dogs to hang on to it, most of us survied some failed, today interest rate is low but houses are out of reach for the young ones. We have always voted for you, but i am not sure anymore, it depends on how you answer this question

Answer 1

After the S & L scandal the fed came in and basically had to drop rates to keep the economy alive, shortly after housing began compensating for the lack of profit by values artificially increasing at double digit rates. In the last few years we have seen energy prices double, yet in all this time wages remained stagnant with growth rates averaging 2-3%. Housing is overpriced caused by speculators, and hype Credit was easy and many used their home as a giant ATM, using all of their equity, now as rates rise slightly, housing has become unaffordable. Just a note the subprime debacle is just the beginning, it is now hitting the Alt-A buyers and then will start hitting the prime credit buyers.

Answer 2

Well Betty, we all bought into that American dream of home ownership! It is one of the best investments a family can make. But we all got a little greedy in expecting to gain whopping increases in equity to the point the most folks couldn't afford to buy a home, which caused increases in value. Then there was all this noise about affordable housing and the mortgage companies made that available, only to the determent of the home owners without fully qualifying these folks on full mortgage payments. So we find ourselves in quite a mess. Some folks can't sell because they have no equity due to interest only loans. Some folks refinanced and took all the equity out and now can't sell because the mortgage is more than the market will bear. Then you those of us who depend on the real estate industry, who have worked hard, not refinanced, not held interest only loans, are about to lose their homes because there is no business.

So, here we are. My mom use to tell me, "you made your bed not lie in it!". I guess we are.

Answer 3

3 day week, strikes on the drop of a hat. Mountains of rubbish in the streets till now she got here to potential? Maggie did no longer smash the rustic, New Labour carried on the place she left off yet weren't in any respect on top of issues.

Answer 4

Ever heard of inflation? Doesn't the same rise in prices also apply to groceries, cars, etc?

Answer 5

no