The housing market is in grim shape. People yearn to buy but are thwarted by rising mortgage rates, unaffordable homes and an inadequate supply of properties for sale.
The hopeful news is that America has been through this before — in 1981 — and things eventually got better. The sobering news is that the early-’80s housing market stayed alive courtesy of some factors that barely exist this time around. We will have to construct a new path out of this mess.
How 2022 resembles the early ’80s
The similarities between now and then start generationally: In 1981, the oldest baby boomers were 35 years old, and that cohort was in full homebuying mode. The first millennials were born that year, and that next-largest generation has been diligently searching for homes in recent years.
When the average interest rate on the 30-year fixed-rate mortgage reached an all-time high of 18.63% in October 1981, it had risen almost 5 percentage points in 12 months. Rates had gone up almost as fast…
This article was written by Holden Lewis and originally published on www.nerdwallet.com