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possiblecoin t1_j5vad7l wrote

Reply to comment by fishythepete in WHY ARE HOUSES SO EXPENSIVE by mommy2boy

"With interest rates where they are, the cost to buy has never been higher."

That's absolutely not true. Average mortgage rates were consistently above 6%, and usually above 7%, from the early 70s until the rate cuts stemming from the financial crisis in the late aughts.

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DesignRemote t1_j5x4ecq wrote

Yes correct my parents had an interest rate of 17% for their $50,000 house

Now it’s 7% on a 800,000 house

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fishythepete t1_j5vc64o wrote

Yes. And homes were much cheaper. When I said the cost to buy has never been higher, I meant it literally.

Take a home that was valued at $250K at the peak of the last RE bubble. Even if that home were on sale for $250K today, the actual cost of that home is significantly higher than it was at the height of the last bubble because interest rates are significantly higher today than they were then. Prices are higher too. And if you add the impact of interest rate increases to the price increases the housing market has seen over the last 12-18 months on monthly cost to buyer (instead of just focusing on asset price inflation), the rate of change is just unprecedented.

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