In 1978, I was single and I began saving $50 a week to buy a house. I purchased a house near 29th Street and Harvard Avenue for $36,000 and sold it a little over two years late for $45,000. I think my mortgage rate was about 10%.
It was a two-bedroom wood frame house with a one-car garage, one bathroom, a window air conditioner, ceiling fan (that worked really well) and a floor furnace.
Susan and I got married in 1982 and a year later, we bought our first house together. It had three bedrooms, one-and-a-half baths, central heat and air and a two-car garage. That house was near 31st Street and Sheridan Road.
We needed a bigger house because we planned to start a family.
At the time, mortgage rates were about 12-13%. The home we bought had an assumable mortgage at 9.5% – which made a real difference in the payment for our 30-year note.
The bank that owned the mortgage tried hard to get us to do a new loan. We had to quality for the assumption and we took out a second mortgage to cover the difference between the mortgage and the price of our new home.
The rate for the second mortgage was 16.5%. It was like putting your mortgage on a credit card. We lived in that house for about 14 years and we made less than $10,000 in profit even though we had painted the exterior; replaced the sewer line in the back yard (we replaced the orangeburg pipe with metal); put a built-in dishwasher and did some landscaping.
It was not a good financial deal but we really didn’t have much of a choice.
We bought our current house in 1997 and we have lived here for about 25 years. We have done a lot of work over the years but now our current assessed value is more than twice what we paid for it. Actually, it might be closer to three times what we paid.
And after paying on a mortgage or two for almost 39 years, we paid off our mortgage.
Things are changing.
None of our three children currently own a home even though mortgage rates are as low as 5% for a 15-year not. I would have killed for a 5% mortgage back in 1978 or 1983.
Those rates are rising.
Not too long ago, when President Trump was in office, rates got as low as 2% or 3%.
And not only are mortgage rates climbing, but the prices of houses are soaring.
Tulsa and Oklahoma City used to be somewhat insulated against rising home prices but that seems to be out the window these days.
What happened?
First, Joe Biden got elected president. He immediately worked on raising taxes on the middle class by eliminating Trump’s tax cuts. He stifled the energy industry – oil and natural gas in particular.
Then he jumpstarted inflation by raising spending by tens of trillions of dollars, effectively devaluing the dollar. The had help with this from the Democrat-controlled Congress and some liberal Republicans.
Inflation is when there is too much money for too few goods. The federal government is throwing so much money around that the cost of everything is skyrocketing. And that includes the cost of houses, the cost of materials to build houses, land, property taxes and the cost to rent houses, apartments, etc.
When inflation jumps, interest rates and mortgage rates rise. It’s inevitable.
My kids make a good living but they are kind of stuck in the lower end of the housing market due to high prices and high mortgage rates.
My strategy was to buy a small house, sell it for a profit and buy a bigger house, and then sell that and get into a nicer home.
Every day that my kids have to wait to buy a house, the costs go up. This is why some many kids are living at home because they can’t afford rent or a mortgage payment.
What is going to happen?
Congress needs to step in and stop the spending. Biden needs to lift restrictions on energy production. We need to fix our balance of trade, especially with Communist China. We need to stop unelected bureaucrats from imposing counter-productive rules on small business and consumers.
This will take a regime change and it needs to happen in November. The Republicans need to recapture the House and Senate and rein in Biden’s Socialist agenda.
Otherwise, all these young people will never be able to afford their own homes.