One thing people don't talk about is that in the 70s and 80s houses might have been less expensive, but money was way way more expensive. Would you put a house on a credit card? Because for a chunk of the 70s and 80s, your mortgage was at the same levels of interest as credit cards today. You might end up with the same house payment back then as you did today, but the bank got the bulk of the money instead of the buyer.
A common accounting trick is called the "rule of 72". You take 72, divide it by your interest rate (or your rate of return for an investment), and you have how many years it takes to pay the entire purchase price in interest, or for your investment to double. At 18% interest, you'd be paying the entire cost of the home in interest every 4 years. In the 1970s, minimum wage was about a dollar an hour, so that's a lot of money to come up with for later gains.
Let's say I buy the house and pay the bank for seven houses worth of interest, and I have this house that quadrupled in value. And? What do I do with that? If I sell the house I have to go buy another house, so it isn't like I'm rich, I've just got this asset that I can't get rid of without getting another one.
People hate on the boomers, but in reality they were already dealing with the fall of the post-war boom. Wages stagnated through their entire lives, cost of living exploded, and a few got super rich but most were just blue collar schlubs trying to make ends meet. People go "The boomers sent away all the manufacturing jobs", but they don't realize that those jobs were the ones the boomers lost directly -- it isn't that they never had them, it's that they had them and then had to deal with the mass layoffs as industry left the west.
The crazy thing I see now is people saying "Oh, they had it so easy in the 2000s" -- for those of us who lived through the 2000s we know that's a load of crap, but that's what people are saying! In 2050 will they be saying the same about 2025?
A common accounting trick is called the "rule of 72". You take 72, divide it by your interest rate (or your rate of return for an investment), and you have how many years it takes to pay the entire purchase price in interest, or for your investment to double. At 18% interest, you'd be paying the entire cost of the home in interest every 4 years. In the 1970s, minimum wage was about a dollar an hour, so that's a lot of money to come up with for later gains.
Let's say I buy the house and pay the bank for seven houses worth of interest, and I have this house that quadrupled in value. And? What do I do with that? If I sell the house I have to go buy another house, so it isn't like I'm rich, I've just got this asset that I can't get rid of without getting another one.
People hate on the boomers, but in reality they were already dealing with the fall of the post-war boom. Wages stagnated through their entire lives, cost of living exploded, and a few got super rich but most were just blue collar schlubs trying to make ends meet. People go "The boomers sent away all the manufacturing jobs", but they don't realize that those jobs were the ones the boomers lost directly -- it isn't that they never had them, it's that they had them and then had to deal with the mass layoffs as industry left the west.
The crazy thing I see now is people saying "Oh, they had it so easy in the 2000s" -- for those of us who lived through the 2000s we know that's a load of crap, but that's what people are saying! In 2050 will they be saying the same about 2025?
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