I would think because incomes were jumping by almost the same degree. Also it was during the time when people accepted needing two incomes per household. I remember two years back to back of double digit raises. My income increased by 35% in a 13 month period via two annual raises of 12% and 13%. Also, when I got married, because of my high salary, it was not deemed acceptable for me to quit my job and stay home with the kids the way it would have been back when I made under $10,000 a year.

So even though interest rates were high, home prices were supported by income increases and the shift from one income to two income households.

According to this affordability dropped through the floor in the late 70s as interest rates spiked. When rates dropped in the 80s, prices spiked, so affordability never recovered.

So I would expect using front end ratio, or mortgage payment/income, people would be able to afford roughly the same place, but using loan=3 x income+20% down people would afford a lot less, because the prices are higher, but monthly payments the same due to low interest rates.

Someone who bought in the 70s or 80s and sold in the 90s would benefit from high interest/low prices when they bought, and high prices/low interest when they sold, meaning a lot of equity. If someone bought at high prices/low interest now, and later there was high interest/low prices, they would lose money off it (and may not be able to move if they were underwater).

But why wouldn’t prices have dropped when rates jumped in the 70s, but they spiked a few years after rates dropped. Was it just the easy financing?

What changed between affordability around 200 from 1950 to 1975 and around 100 from 1975 to 2003, to 75 now?

I tried running comps on line (via the title company) but these days, it’s not always such an easy task to come up with a value you can feel strong about (as a lender).

If you shoot me the address, I’ll do the valuation of what it would sell for at peak pricing and today. Two separate valuations. Then you do what the income is and what they qualify for, not 60% backend , and we’ll have the answer.

We did sell it one year later. In 89, prices were going up quickly and we sold the home for quite a bit more than what we paid for it.

Did you purchase your first house as a one income or two income household?