Not by a long shot. To put it in perspective, I remember getting giddy one afternoon a couple weeks before Christmas, ‘cuz I’d located an adjustable loan with a rate less than 12%! Giddy.
Between the various local rags around the country and the average real estate agent, you’d think the 21st century’s version of the Great Depression was just around the bend. The average real estate agent was licensed way after 1996, the transition year taking us from S & L Crisis hell to the boom we left behind over two years ago. The media? The only thing in our culture more predictable than their ‘if it bleeds it leads’ approach to news, is the sun setting in the west.
The agents? Their excuse is rampant cluelessness. (A new word I just made up.) It’s mostly not their fault as Oh My Lord! good times is all they’ve known their entire careers until this correction began. To them this is Armageddon. Hardly.
Beginning in the last quarter of ’79 and into the early ’80′s we would become ecstatic to see the relatively low price of an income property — then have our spirit crushed by what we knew the lenders would charge for interest. Nearly every day was a roller coaster emotionally.
Compared to the early ’80′s correction this is an after school fight at the local elementary school. Ever heard of 16.5% FHA loans? How ’bout 20%+ Prime Rates? My wife (back then) actually made more money at her bank job one year than I did in investment real estate — and I busted my fanny.
Think I’m leaning on the hyperbole here? OK, fair enough. Maybe you’ll believe the quote below. It was said very recently (About a week ago.) by someone pretty well known. Tell me who you think it is.
“I went through 1982 when short-term money cost 21%. This is not a tough period.” (Emphasis mine.)
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Brady
Benjamin — Since Brian was in high school at the time, the answer would be no. But I’m sure he’ll be flattered, as that wasn’t a bad guess.
Trump?
Benjamin F — Nope, but a pretty solid guess.
Hint: This person is older than Trump.
Buffet
Dru — Correctamundo!
Don’t be a stranger, and tell my buddy Russell I said hi.
Hi, I agree with your basic premise – that things have been much worse from an interest rate perspective. Yet there are several large macro-economic differences that are often left unsaid that impact the affordability of property – and the health of our economy.
1) Middle-class wages are drastically lower in constant dollars.
2) Price of housing (rents or buying) are significantly higher as a % of income.
3) Inflation then was calculated differently than it is today – today’s inflation rates are grossly underreported.
4) Our low interest rates are financed largely by middle-east countries and the Chinese. This is not sustainable forever.
At today’s rent/property cost ratios, consider how difficult it would be to buy income property if rates were as high as they were in the early 80s?
(OK, this comment is way off topic, but I was compelled to comment. I enjoy the blog.)
Tim — your points are all well made. Still, tainted formulas or not, the financial markets remain the real barometer of both inflation and (horror) deflation.
I refuse to imagine how terrible this correction would be with the ’80′s interests rates were today’s. Wow.
I like your comment Tim — keep coming here.