Calling all angry old men, what was life like with 12% home loans?

[EddieNFL]

View attachment 7846411Just to set the record straight it was the Regan years with the highest mortgage rates in the last 50 years. Basically you had several options to deal with high mortgage rates, buy a cheaper home, make a bigger down payment, balloon mortgage (interest only for the first few years then refinance hoping the rates are lower. If you are creative and find the right seller Land Contract or a Lease to Own can be a possible option.

Where do you think those rates started?

 

[Dunraven]

Ah, the Carter years. Home owners felt the results of his administration for 10 years. But not to worry. If you're too young to remember, Biden has said, "Those are rookie numbers. Hold my beer."

They coined the phrase "misery index', which added inflation and interest rates. The economy essentially shut down. Until Reagan came along and gave us the longest peace-time economic recovery in history.

 

[pmclaine]

That was also back when health insurance actually paid for things and didn't cost as much as your mortgage, gas was cheap and so was food, ect.... so all in, it wasn't that much different in terms of disposable income. The culture of the country was very different though as a whole. The other side to higher rates is that it made it possible for regular people to save money and actually increase their wealth by doing so.


In the 50's, a regular job for a man could provide for a family. One job, not mommy working , but just dad. That could buy the latest in technology, a vacation or two for the family each year, a car or two, a house, and save for later. Not some high end CEO job, but a mechanic, or a plumber, or an insurance salesman, a hardware store, ect....


Now it takes 2 very strong incomes to do the same thing...... so why is that? What in our system has caused this to happen? Will it get better or worse? What can we do to alter the outcomes?

The real aim of the second income was taxing the other half of the country.

 

[Moose]

In 1978 I opened a CD with 15% interest and they gave me a color TV but you were screwed if you wanted to take a mortgage out.

 

[Bender]

Rates had to go up to kill inflation. Think taking a wheelbarrow of cash to buy bread.

I was referring to Regan having anything to do with what shitstorm he inherited from the peanut farmer

 

[Bender]

They coined the phrase "misery index', which added inflation and interest rates. The economy essentially shut down. Until Reagan came along and gave us the longest peace-time economic recovery in history.

This, for you liberals retards.

 

[greg1147]

Walked away after 6 years of military in 74 bought a house 8.5%,79 divorced moved on 81 condo 15.25%, , now 3.25% mortgage companies and real estate agents "Go Fuck Yourself" I'm done.

 

[Long_Action]

Our Education System and Parents themselves do not teach kids how the REAL WORLD functions. The United States Economy and Monetary System is a lot like surfing. Republicans and Financially Conservative People are most excellent surfers. Libtards and Free Spirited People think the System is rigged against them and life isn't fair. You ride the waves and plan for the Peaks and Valleys.

In 2000 I paid 8.3% for my first 103K home. 1100sq ft 90 year old bungelow in the City. I put roughly 10k into it and sold it 4 years later for 130K

Second house I purchased for 171K. 2400sq ft house that was 15yrs old. Added air conditioning, Actual Walnut flooring, Granite everywhere, 11tons of flagstone outside with a 8 person Hot Tub & fenced in backyard. Had a 5% Interest Rate when I purchased the home.... As other people were walking away from homes, we were busy paying ours off and putting 30k into improvements.

In 2015 the Market was still shit, but the bank note on my house was clear. I put an offer in on our current house/land for 150k less than what it was originally posted for. When the contingent offer was accepted, I listed my home and had 4 offers on it in less than 12 hours. Winning Offer was for 10k over asking with 20% down.

I'll be the first to tell you that I'm not incredibly intelligent. I work hard/play hard and my body will be shot by the time I hit the bottom of my grave. My wife is Incredibly smart and together we make a great team. I'm the risk taker and she is the planner, but we are both very Savvy with our Money... I've watched friends and family struggle through life and now I'm looked at as an arrogant prick as I have my shit sorted out. I remember Graduating with a 2 year degree and living in a trailer with only a 100 year old single bed and 19" tv to my name. How times have changed!

All I can cay is Live for Today, but Plan for Tomorrow. Most of my Buddies are 20 years older than myself. When the Older Generation opens up and talks..... Listen and form you own judgements later, but LISTEN. I've found that Arrogance is the #1 killer of Success, and I remember growing up in the 80's. I remember and playing with my Dukes of Hazard car on plywood floors because we could't afford carpet and the Luxury of getting McDonald's in our 3 cylinder dodge colt that had crank winders and no Air Conditioning. If you think that's bad, I remember my Grandmother telling me how she would take Strawberries to Market and mark them up from 5cents to 7, so the she and her siblings could buy candy.

It doesn't matter if your house is 800sqft or 5k... Live for Today, but plan like it's going to Rain Tomorrow! In 4 years when my kiddo Graduates, I'm most likely going to punt our place and go back down to under 1500sqft with even more land. We'll have a place similar to Randy Weaver & I'll only check the Hide when we take the Dodge Colt to McDonald's for free WIFI.....

 

[TXAZ]

If you remember back to Gerald Ford’s 2.5 year presidency, the last 2 years he wore a “WIN”, Whip Inflation Now button. It came down some from the end of the Vietnam-era economy retooling, but not enough to win the 76’ election.

Then Carter tweaked the economy causing a dramatic increase in inflation, which was somewhat remediated by 1979, but not enough to beat Reagan, whose policies further stabilized most of the economy.

And here we go again, with FJB’s policies driving the curve up again:

 

[Michael52]

Home affordability for most ignorant people only means if they can afford the monthly payment. The principle amount means nothing to them.

The government entities that levy property taxes based on market value absolutely love the stupid high selling prices nowadays.

When interest rates go up at a quick pace, housing prices WILL have to reset to a sane level just so people can afford the monthly payment. Those that bought at the peak of selling prices will be stuck for a while. Likely, they will not be able to sell anywhere close to their original buying price unless they owner finance at below market rates.

Yep. All that lowering rates did was encourage people to overbid on the asking price until they met their payment limit. I'd rather have a higher rate and a better chance of paying off the lower price, plus I'd be earning on my savings. Lowering rates is also financing the deficit expansion and it has encourage investors to buy houses and bid prices up since they don't get any earnings from interest accounts. Like everything that the government does this just causes more problems then it fixes. I do expect that house prices will come down if rates go up since the payment is all that matters. However the drop will be off set by the increase in inflation due to the goverment fabricating money to pay the higher deficit.

 

[Vodoun daVinci]

And here we go again, with FJB’s policies driving the curve up again:

I don't like Biden any more than you do but the policies and circumstances driving current inflation were certainly in place long before the last election or current failings. This has been coming for some years now. It's a correction and will have to be endured because too many dumb fucks have been tampering with Economics 101 for many years now. We just have to buckle down and dig in until it rights itself. If it ever does.

VooDoo

 

[addertooth]

The current inflation spike has been caused by three things:

1. Excessive Government Spending, the amount we threw at Covid was staggering when you add it all up.
2. Shipping woes and delays as a result of covid. This resulted in a spike in overseas shipping costs, along with delays.
3. The chilling effect the current administration has had on the oil and gas industry, resulting in expected production growth to not be met.

A sub-group of Covid problems include increased use of online shopping for items, as versus local stores (which already had a mass shipping
mechanism in place. This created a new demand for the transportation sector, which had to grow to meet this new type of shipping demand.
This resulted in additional fuel use, and an increased demand for experienced truckers. Trucking costs rose as a predictable outcome.

The government response of raising interest rates has worked in the past, when the consumer "overborrowing and spending" was the
ROOT cause of inflation. However, the consumer (according to credit card companies) has been paying DOWN credit card debt at record rates,
which is the opposite of borrowing and spending. This discussion is slightly different in the housing industry.

In short, raising interest rates is akin to putting a tourniquet on your Right leg, because your left arm has been severed. It will have impact,
some of which be undesirable, but not address the root causes of inflation (items 1, 2, and 3).

 

[XTREM HTR16]

They coined the phrase "misery index', which added inflation and interest rates. The economy essentially shut down. Until Reagan came along and gave us the longest peace-time economic recovery in history.

My 89 yo father was born and raised on a farm, went and got an electrical engineering degree at age 28, started his own company in 75 with a wife and 4 kids at home when I was 10. He can tell us the interest rates but most often the “misery rate” of 24-26% from the 80’s. I remember going to the farm on Saturday to work all day, and Dad would stop at Dairy Queen on the way home and we could get a sundae or a shake. And be happy.

Wife and I decided to build our ”forever” home last year, locked in a 30 yr construction to permanent loan at 4.25%. At the time I wasn’t sure it was a great rate. Now? We are happy.

 

[seansmd]

You fellow old codgers didn't even get into the property tax boom the locals get on these prices.

We moved out of San Jose last year sold to first time buyers who are now paying $18k a year in property taxes on top of the nut of the $1.5M overpriced house they bought.

CA has prop something or other, ours was like $12k based on the $800k we payed 8 years earlier for the same overpriced house.

 

[_Windrider_]

You fellow old codgers didn't even get into the property tax boom the locals get on these prices.

We moved out of San Jose last year sold to first time buyers who are now paying $18k a year in property taxes on top of the nut of the $1.5M overpriced house they bought.

CA has prop something or other, ours was like $12k based on the $800k we payed 8 years earlier for the same overpriced house.

Prop 13

 

[muzzleloader]

I was referring to Regan having anything to do with what shitstorm he inherited from the peanut farmer

We’re on the same page Bender

 

[buffalowinter]

Bought a Condo with 20% down and a 13% ARM (I planned to sell when I changed assignments)in 1987. The good news during this time was that Mutual Funds, like Fidelity Magellan (where half my paycheck went every month, or all my paycheck if I was deployed) were making 18% and considered safe investments. That all began to change around 1989 when the market crashed. Fortunately, I had decided to get into real estate. I liquidated about 80% of my stock holdings and started buying the cheapest condo's on the market in Boulder, Colorado, and renting them. Plowed rent right back into mortgage payments and financed new condo's using home equity loans from my credit union. Then got married, and wife could borrow interest free from her TDSP at IBM.

 

[nra-life-member]

You bought less house for the money and upgraded when you could.

 

[remaction]

Ggmanning hit it. Live within your means. Do a written budget, inflows, outflows and emergency fund. F**k the Jones’s, don’t worry about keeping up with others. New house, new vehicles, boats, motorcycles, etc. seldom fit. Don’t overextend yourself. If you live paycheck to paycheck that is your first sign of overextension. I feel bad for people trying to buy and finance homes for the next several years. Everyone wants top dollar because of the recent market conditions and with rates going up there will be many people buying above their income
level because “that’s what it costs”. 5 years from now there could be some really great buys. We get lulled into what is an acceptable price. These are my basic rules but can vary widely based on your location. In a growing market it may make sense to stretch it a bit due to appreciation in value. I’m sure Threadcutter308 doesn’t mind any financial pain he may have had early on as he ended up in the perfect spot. Where I live, conservatism has worked for me. I have money (due to saving and investing) that otherwise would have gone to the finance companies if I would have tried to keep up with the Jones’s.

 

[candyx]

Don't worry about it borrow all you can and live like a king , your dying a little bit everyday so WTF.

 

[Jgault]

It’s not just mortgages, while the mortgage rates will be unpleasant enough to put it lightly the increased rates will effect everything. As the prime rate rises it will suck money out of the economy, and unemployment will rise as rates rise. It’s a small business and small town killer. Thomas Jefferson said it better than I ever can “If the American people ever allow private banks to control the issue of their currency first by inflation then by deflation the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered... I believe that banking institutions are more dangerous to our liberties than standing armies..”. At the time he was speaking about centralized banks in general, I can’t imagine what he would think of the monstrosity that is the federal reserve. The short answer to your questions if rates go to 18% again small towns and businesses will die, people will be driven into the cities for employment because the only business that will be able to borrow and expand will be corporations, and allot of people will become renters.

 

[BLEE]

That was also back when health insurance actually paid for things and didn't cost as much as your mortgage, gas was cheap and so was food, ect.... so all in, it wasn't that much different in terms of disposable income. The culture of the country was very different though as a whole. The other side to higher rates is that it made it possible for regular people to save money and actually increase their wealth by doing so.


In the 50's, a regular job for a man could provide for a family. One job, not mommy working , but just dad. That could buy the latest in technology, a vacation or two for the family each year, a car or two, a house, and save for later. Not some high end CEO job, but a mechanic, or a plumber, or an insurance salesman, a hardware store, ect....


Now it takes 2 very strong incomes to do the same thing...... so why is that? What in our system has caused this to happen? Will it get better or worse? What can we do to alter the outcomes?

In the 50's, middle class families lived in 1500 sq/ft homes, even if there were five children and often had one modest automobile, usually a Ford, or Chevrolet. Mom and pop stores were right around the corner, so we didn't have to drive five miles to Walmart. Milk and bread was delivered to our front doors. We weren't nearly as materialistic. Our hobbies were fishing, hunting, woodwork, etc. Our hobbies produced something. Teenage boys drove dad's Impala to pick up their dates and didn't own an automobile until they got a full time job, of their own. We didn't use lawn, or house keeping services. Those teens did that work to earn car privileges. Americans made less money, but often had more of it. I think American society was less stressed and happier, by a long shot.

 

[Ric O'shay]

I don't know, but you are about to find out. Seems like the hair sniffer is out to break every record of fuckery owned by Billy Beer's dumber brother.

 

[E. Bryant]

In the 50's, middle class families lived in 1500 sq/ft homes, even if there were five children and often had one modest automobile, usually a Ford, or Chevrolet.

I'm only in my 40s, but I remember growing up in an era when having two bathrooms in a three-bedroom house was a bit uncommon, and attached two-stall garages weren't a guarantee in our middle-class Midwest neighborhood. We certainly as hell didn't have "bonus rooms", but there was some swanky paneling in finished basements. I'd say the average house might have been 1500-1600 sq. ft., not including the basement.

Oddly enough, new cars were more common back then, but those cars were more affordable than now in terms of the sticker price compared to average wages, and they simply had to be replaced more often because they were pieces of junk.

Putting stuff on credit cards simply wasn't a thing. If you wanted something but didn't have the money, then off to the layaway department you go.

 

[BuildingConceptsllc]

In the 50's, middle class families lived in 1500 sq/ft homes, even if there were five children and often had one modest automobile, usually a Ford, or Chevrolet. Mom and pop stores were right around the corner, so we didn't have to drive five miles to Walmart. Milk and bread was delivered to our front doors. We weren't nearly as materialistic. Our hobbies were fishing, hunting, woodwork, etc. Our hobbies produced something. Teenage boys drove dad's Impala to pick up their dates and didn't own an automobile until they got a full time job, of their own. We didn't use lawn, or house keeping services. Those teens did that work to earn car privileges. Americans made less money, but often had more of it. I think American society was less stressed and happier, by a long shot.

That's largely true, but the cars were still the cars of the time, as was modern technology and standard conveniences, and quality Healthcare, ect... All of it was paid for by one average salary too. Women's lib and other liberal ideology play a big role in this whole equation, but the biggest factor is how our monetary system works. The FED, in short.

Your point is a very good one though. The focus and lifestyle changes that have occurred have certainly not been good for us as a whole, and that goes for any segment, any social status or racial group. Rates being super low (though it's very good my my business) are also not a good thing for society because it discourages saving. Just like subsidizing having out of wedlock children encourages more out of wedlock children, low rates encourage spending not saving. None of this is an accident, it's all a result of the liberal ideology that has done so much damage to our society.

 

[Shooter McGavin]

My parents purchased a house in 1970. I think the interest rate was 14% and the house was $40,000. My Mom told me how she hated living out in the middle of nowhere. Well it's not in the middle of nowhere anymore. They sold the house in 93' for $240,000.00. That same house is worth $639,400.00 now.

 

[Ravenworks]

That was also back when health insurance actually paid for things and didn't cost as much as your mortgage, gas was cheap and so was food, ect.... so all in, it wasn't that much different in terms of disposable income. The culture of the country was very different though as a whole. The other side to higher rates is that it made it possible for regular people to save money and actually increase their wealth by doing so.


In the 50's, a regular job for a man could provide for a family. One job, not mommy working , but just dad. That could buy the latest in technology, a vacation or two for the family each year, a car or two, a house, and save for later. Not some high end CEO job, but a mechanic, or a plumber, or an insurance salesman, a hardware store, ect....


Now it takes 2 very strong incomes to do the same thing...... so why is that? What in our system has caused this to happen? Will it get better or worse? What can we do to alter the outcomes?

I think that time extended into the 70's and then there was Carter.
Life back then was much much more simplified.

I agree with you for the most part except about health insurance.
I've been pretty lucky and have had good insurance.
Care to elaborate about insurance more?

 

[DocRDS]

"It sucked ass" but was good times.

 

[RonA]

Paid 11% on our first home in 1982. around 7% on the second and 4.25 on the 3rd(1990). Been paid off for a while.
Life begins when the house and machinery are paid off. You spoiled 2.5%interest with almost nothing down guys have
nothing to complain about.

 

[Oldloser]

My grandparents sold their successful businesses they built over 30 years in 1979 for millions at inflated prices. Smart move. They put the money in real estate and oil and gas leases. LOL. They ended up getting 10 cents on the dollar in the late 80s when it all sorted out.

One of the guys who bought their heavy equipment business shot himself when it all fell apart.

They had about 500K in cash and that went into CDs and they were able to support themselves on the interest.

They made their mad money supporting both private and public lawsuits doing investigative and forensic work and testified in a half dozen trials. My mom had to move in with them.

 

[BuildingConceptsllc]

I think that time extended into the 70's and then there was Carter.
Life back then was much much more simplified.

I agree with you for the most part except about health insurance.
I've been pretty lucky and have had good insurance.
Care to elaborate about insurance more?

If you are self employed, you pay absolutely insane rates and the insurance doesn't even cover anything, such ad having a baby. It covers men getting birth control, but not the actual expenses of having a baby, then they dismiss the woman who just had a baby and the baby becomes the patient and only patient. Even though, the mother has to stay there and take care of the baby, who has to stay another 2 days.

That's just one example of the absolutely horrible, yet super expensive insurance we have now. Pre Obama it was not the case.

 

[W54/XM-388]

Paid 11% on our first home in 1982. around 7% on the second and 4.25 on the 3rd(1990). Been paid off for a while.
Life begins when the house and machinery are paid off. You spoiled 2.5%interest with almost nothing down guys have
nothing to complain about.

Before getting on your high horse about folks complaining, step back and think about this:

When you bought your home back in 1982 and your other one back in 1990, what was the total cost of the house in relation to the average working wage?

The working class folks can much better afford a cheaper house that has a higher interest rate on the loan, rather than a super expensive house that has a pretty low loan rate.

The cost for housing has skyrocketed, way past the rate of increase for wages / salaries.
You want to have a house for your family, you are really stuck with being squeezed hard.

 

[theLBC]

i am not sure you can compare without taking home prices into account.
when this place was first sold, interest rates were almost 9%, but the price/value was 1/10th of what it is today.