Whenever someone complains about today's mortgage rates, somebody inevitably says:"You think 7.5% is bad? I paid 14% in the 1980s!"They're right about the interest rate.But they're missing the bigger problem.GEN Z IS WORKING HARD, BUT THE ECONOMY IS PUTTING THE AMERICAN DREAM OUT OF REACH FOR MANYToday's homebuyers aren’t just fighting a 7% mortgage.
They're fighting high rates on a home price that has grown much faster than the amount sitting in their checking account.Home buying has gotten more difficult and more expensive.(Kurt Knutsson)Look at the numbers.A PROBLEM HIDING IN PLAIN SIGHT IS KEEPING AMERICANS FROM BUYING HOMESIn 1984, the median new home sold for about $79,900, while median household income was roughly $22,400.
That's a home-price-to-income ratio of about 3.6 times income.The average 30-year mortgage rate that year was a painful 13.9%.Now fast-forward.AMERICA'S HOUSING MARKET COULD RUN OUT OF SOMETHING MORE IMPORTANT THAN HOMESBy 1990, the ratio had climbed to about 4.1 times income, with the median new home costing $122,900.
In 2000, it remained around 4 times income, even with mortgage rates still above 8%.Then housing prices really started separating from paychecks.GEN Z DEMOCRATIC LAWMAKER SPARS WITH BABY BOOMERS OVER WHETHER AMERICAN DREAM IS DEADBy 2010, the median new home cost roughly 4.5 times median household income.By 2020, it was approaching 5 times income or $330,900 for the house versus roughly $68,000 in household income.When someone says, "We had 14% mortgages in the 1980s, and we still bought houses," they're leaving out half the story.WE MUST HELP MORE PEOPLE BUY A HOME.
IT’S KEY TO THE AMERICAN DREAMHomes were much cheaper relative to what families earned.In 1984, the median new home sold for about $79,900, while median household income was roughly $22,400.That's a home-price-to-income ratio of about 3.6 times income.
The average 30-year mortgage rate that year was a painful 13.9%.The median existing home price was $429...