No. of Recommendations: 1
What kind of tent did you buy? When I bought a house in 1983 it cost 5 times my annual salary. When I sold it 30 years later, it cost 5 times my last annual salary before I retired. My salary had grown quite a bit in real terms over the years, fortunately, but still no earth shattering change overall in housing prices.
I think one disconnect here is interest rates. Rates were super high in the 80's, so while housing prices were lower at that time (and a smaller fraction of one's annual salary than today), housing prices combined with high interest rates still made housing affordability very challenging for the average family paying a mortgage.
Indeed interest rates were very high in 1983. I assumed an adjustable rate mortgage from the seller at the time, and paid about 13% annual interest, which came down far too slowly as interest rates dropped. So I refinanced a couple of times until the rate came down to earth. But that's not the whole story either. Inflation was very high too. Real estate was a very good inflation defense, so while interest rates were high they weren't very high after inflation, and houses therefore weren't as cheap as you'd expect.
Elan
