What was the average cost to buy a house or car in the 80s and 90s?

[KaiFiMacFan]

Oh no question, there's not a single reason, I was just responding to the idea that people are unable to buy homes because they're going out to eat and not sacrificing enough. I think so many young people would want to buy a house if they had the opportunity but far too many are living check to check given the economic situations of 2023, i.e., high rent, high living expenses, salaries and raises are on the low end for many people

Yep. Not to mention student debt. It's a lot more difficult to buy your first home shortly after graduating college (something my grandparents were able to do easily) when you're saddled with as much debt as many people in their early 20s are these days.

At least the "work from home" boom means that for some industries, it's no longer incumbent on people to live in the most expensive areas to have those well-paying jobs. You don't have to join a waitlist for a $3800-a-month 1-bedroom apartment in Silicon Valley to work at Google anymore.

 

[pshufd]

Yep. Not to mention student debt. It's a lot more difficult to buy your first home shortly after graduating college (something my grandparents were able to do easily) when you're saddled with as much debt as many people in their early 20s are these days.

At least the "work from home" boom means that for some industries, it's no longer incumbent on people to live in the most expensive areas to have those well-paying jobs. You don't have to join a waitlist for a $3800-a-month 1-bedroom apartment in Silicon Valley to work at Google anymore.

WFH expands your options but most WFH jobs that I've seen require you to come into the office a few times a week to a few times a month. Some jobs it's a few times a year. So WFH doesn't necessarily mean that you can live 2,000 miles away unless you're comfortable flying into the office. I have had managers that lived 3,000 miles away that came into the office a couple of times a year to once every few years but it's hard to have personal one-on-ones with such distance.

 

[dukebound85]

Back in 2010-2012, I recall seeing homes for $5,000 in rust-belt cities. Many of those cities have improved from back then and I imagine those homes are worth far more

If you want to live in the nice areas, though, there's a ton of demand.

Homes here that I am referencing were still 200k plus then.

 

[dmr727]

We bought in 1988 and paid it off in 2000 thanks to the Internet Bubble.

What's that house worth now? Would your 1988 year old self be able to afford that same house today, given today's salary for the same job? Because that's what this thread is about.

 

[pshufd]

What's that house worth now? Would your 1988 year old self be able to afford that same house today, given today's salary for the same job? Because that's what this thread is about.

Yes. Easily. Though we'd just pay cash for it today.

 

[dmr727]

Yes. Easily. Though we'd just pay cash for it today.

Not talking about what you could do today - I want to know what you could do in 1988. Gimme some numbers. Tell me the house's price in 1988 and what it's worth today. What was your income then and what would that same level of employee be making today?

Because if what you're saying is true, it just means you bought well beneath yourself in 1988.

 

[pshufd]

Not talking about what you could do today - I want to know what you could do in 1988. Gimme some numbers. Tell me the house's price in 1988 and what it's worth today. What was your income then and what would that same level of employee be making today?

Because if what you're saying is true, it just means you bought well beneath yourself in 1988.

$105K in 1988, $330K today. Income back then was $57K as a principal software engineer with 10 years of experience. I'd guess that such a position today would pay double to quadruple that depending on the type of place you worked at. Big-cap tech companies would pay a lot more than state government jobs. It would depend on the area that you're working in and how hard you're willing to work. The mortgage payments on our place today would be about double what we paid back in 1988, mainly because interest rates were a lot higher back then.

We did buy well below what we qualified for.

Our state has no income or sales taxes so you can chose your total effective tax rate based on the value of the property you buy.

 

[dmr727]

$105K in 1988, $330K today. Income back then was $57K as a principal software engineer with 10 years of experience. I'd guess that such a position today would pay double to quadruple that depending on the type of place you worked at. Big-cap tech companies would pay a lot more than state government jobs. It would depend on the area that you're working in and how hard you're willing to work. The mortgage payments on our place today would be about double what we paid back in 1988, mainly because interest rates were a lot higher back then.

We did buy well below what we qualified for.

Our state has no income or sales taxes so you can chose your total effective tax rate based on the value of the property you buy.

Oh wow - interesting. Appreciate the numbers, it makes the conversation more valuable IMO. I think a lot of folks have seen a much higher increase in real estate value, which drives the other side of the conversation. In many areas of the country, a $250K job would no longer be able to afford what that house would now be worth - likely seven figures.

 

[pshufd]

Oh wow - interesting. Appreciate the numbers, it makes the conversation more valuable IMO. I think a lot of folks have seen a much higher increase in real estate value, which drives the other side of the conversation. In many areas of the country, a $250K job would no longer be able to afford what that house would now be worth - likely seven figures.

There are still lots of places where prices are not 7 figures. Boston and the suburbs are typically 1 million and up for a single-family home and some land but you can get a house for a lot less than that in Springfield, MA. People that post in the Mass subreddit that ask for housing for a reasonable price are often recommended to look in the western half of the state where things cost far less. There has been a lot of demand for commuter rail going east-west throughout the state so that people can easily commute to Boston from the western half of the state.

 

[pshufd]

Oh wow - interesting. Appreciate the numbers, it makes the conversation more valuable IMO. I think a lot of folks have seen a much higher increase in real estate value, which drives the other side of the conversation. In many areas of the country, a $250K job would no longer be able to afford what that house would now be worth - likely seven figures.

Prices in my town are still pretty reasonable. It's in a safe town in the second-safest state in the country. It's typically in the top 10 in Pre-12 educational rankings, percentage of the population for degrees. It has the lowest unemployment rate in the country. The metro has been awarded best place to live in the US by Money Magazine. Twice. And it's an hour outside for Boston and there are a lot of commuters to Boston from my town and the adjacent cities and towns.

I would not personally enjoy commuting to Boston myself unless my lifestyle supported it.

This area is not a great place for young adults though. It is a family-friendly area but it doesn't have much in the way of night-life or activities outside of outdoors stuff like hiking, fishing, canoeing, skiing, etc.

This is a college town that I really like and it's an hour from us so 2 hours from Boston. I have thought about buying a place here in the past but we've been working on rehabbing a house in Boston and we have another place in Singapore and that's enough homes to deal with for now.

 

[KaliYoni]

What's that house worth now? Would your 1988 year old self be able to afford that same house today, given today's salary for the same job? Because that's what this thread is about.

It's hard to say what this thread is "supposed" to be about because the OP has only made a single brief post.

¯\_(ツ)_/¯​

 

[dmr727]

It's hard to say what this thread is "supposed" to be about because the OP has only made a single brief post.

¯\_(ツ)_/¯​

That's true - I was making an assumption about the OP's intent.

 

[smoking monkey]

I think that's not entirely correct, I know many people who would love to buy a house, and are trying, but the housing situation in Massachusetts make its a struggle as I said earlier.

Painting people who can't buy houses as unwilling to sacrifices is inaccurate.

I didn’t mean unwilling and don’t mean to sound harsh. It’s just reality. I said how much are they willing to sacrifice. That’s an important difference.


I think your stepson is a good example. He’s not willing to move to buy and that’s okay. He wants to buy in Boston in the city. He could move to a different state and get a house for a lot less. I’m not saying it’s a great circumstance though. Your stepson could buy an apartment and that would be cheaper. There are options but none are probably what he wants.

So I ask, how much are people willing to sacrifice? For some it’s a lot and some not so much.

I also think it doesn’t matter than now is more difficult. These are the times we live in. We can’t obsess with the past and how easy it was for boomers to enter the housing market. The current market is ridiculous but that’s what we have unfortunately.

 

[dukebound85]

I didn’t mean unwilling and don’t mean to sound harsh. It’s just reality. I said how much are they willing to sacrifice. That’s an important difference.


I think your stepson is a good example. He’s not willing to move to buy and that’s okay. He wants to buy in Boston in the city. He could move to a different state and get a house for a lot less. I’m not saying it’s a great circumstance though. Your stepson could buy an apartment and that would be cheaper. There are options but none are probably what he wants.

So I ask, how much are people willing to sacrifice? For some it’s a lot and some not so much.

I also think it doesn’t matter than now is more difficult. These are the times we live in. We can’t obsess with the past and how easy it was for boomers to enter the housing market. The current market is ridiculous but that’s what we have unfortunately.

I was just reading in 1989, median home price was 130k, median salary was 28k and interest rates were 16%

Didn't seem easy then either

 

[pshufd]

I was just reading in 1989, median home price was 130k, median salary was 28k and interest rates were 16%

Didn't seem easy then either

Rates were above 16% in 1981 and 1982 and for a very short period of time in 1980. A good way to get historical economic data is to Google Fred along with whatever numbers you want.

 

[HDFan]

The alternative is to rent your entire life. That’s just paying someone else’s mortgage!

There are places right now where it is cheaper to rent than buy. If you stash the money saved then once the ratios change to favoring purchasing you would be better off. In the Fortune example you could save almost $70K in one year by renting.

Should you rent or buy? Before you decide, ask yourself some questions

The decision to rent or buy is more complicated than cost alone.

fortune.com

https://homebay.com/price-to-rent-ratio/

Is it better to rent or buy? The best house prices vary city to city

From 2016 to 2023, home prices in the 50 largest metros climbed 73%, whereas rent prices went up by 45%.

www.usatoday.com

 

[Apple fanboy]

There are places right now where it is cheaper to rent than buy. If you stash the money saved then once the ratios change to favoring purchasing you would be better off. In the Fortune example you could save almost $70K in one year by renting.

Should you rent or buy? Before you decide, ask yourself some questions

The decision to rent or buy is more complicated than cost alone.

fortune.com

https://homebay.com/price-to-rent-ratio/

Is it better to rent or buy? The best house prices vary city to city

From 2016 to 2023, home prices in the 50 largest metros climbed 73%, whereas rent prices went up by 45%.

www.usatoday.com

But you’re still renting for a longer period. If you rent for ten years then buy on a 25 year mortgage you are paying something for 35 years. If you had bought at the same time you’d only be 15 years from mortgage and rent free.
I purchased my first house at around 25. I wasn’t going to rent any longer than I had to. We finished that mortgage early and lived mortgage free for many years.
Now we moved to a more expensive property and I have a 10 year mortgage. I plan to finish it well before then.
Renting was never part of my life plan.

 

[pshufd]

But you’re still renting for a longer period. If you rent for ten years then buy on a 25 year mortgage you are paying something for 35 years. If you had bought at the same time you’d only be 15 years from mortgage and rent free.
I purchased my first house at around 25. I wasn’t going to rent any longer than I had to. We finished that mortgage early and lived mortgage free for many years.
Now we moved to a more expensive property and I have a 10 year mortgage. I plan to finish it well before then.
Renting was never part of my life plan.

My financial philosophy since the 1990s: to build wealth, create streams of income that require little effort to sustain them. Then create additional streams from the income they product. Renting is the opposite of that.

One downside of renting is that you have to be fully prepared to move if the annual negotiation doesn't work out. And there's a bit of anxiety around that. If you have kids and a life, then the move can have pretty big expenses associated with it.

 

[HDFan]

If you rent for ten years then buy on a 25 year mortgage you are paying something for 35 years.

If you assume the (unrealistic) $70k savings per year you could have saved more than $700k + interest, or maybe even more if you had invested it. You might not even need a mortgage, possible you could buy it with cash.

Buying vs renting has been the recommended strategy for, like, forever. Things have changed and financial strategies should as well. Housing prices are just not affordable in many areas (such as mine) even even if you have 6 digit incomes. The monthly mortgage for a median cost house here is ~$8.5k, and could go higher if interest rates go above 7%. Thats over $100K a year, which means household income would have to be $300K or higher. Renting isn't a poor option, it is the only way to get housing for those who don't make that much.

Sounds as if you are lucky enough to live in an area where homes are still affordable.

 

[Apple fanboy]

If you assume the (unrealistic) $70k savings per year you could have saved more than $700k + interest, or maybe even more if you had invested it. You might not even need a mortgage, possible you could buy it with cash.

Buying vs renting has been the recommended strategy for, like, forever. Things have changed and financial strategies should as well. Housing prices are just not affordable in many areas (such as mine) even even if you have 6 digit incomes. The monthly mortgage for a median cost house here is ~$8.5k, and could go higher if interest rates go above 7%. Thats over $100K a year, which means household income would have to be $300K or higher. Renting isn't a poor option, it is the only way to get housing for those who don't make that much.

Sounds as if you are lucky enough to live in an area where homes are still affordable.

Nope not really. Our house is quite large, in a nice area and costs well above the national average.

Nobody saves 70k a year. Plus house prices (generally) rise more than interest. Especially over the last 15 years.

I left school at 15. Bought a house as quickly as I could. Nearly doubled my money on the first one I bought in a few years.

I still think renting is a mugs game. But am sympathetic to those that can’t get in the ladder. Of course buying property in a cheaper area and renting it out to earn equity whilst you rent elsewhere is another option (one that a friend of mine is doing).

 

[JamesMay82]

My parents bought their house in 1993 for £135k and now it’s valued at £830k. House prices have gone wild over the past three decades. My Dad had paid £11k for our house in Stratford Upon Avon in 1981 prior, and that then sold for £75k.

My own house is worth over a £100k more than I paid in 2016 and that valuation was done to get a mortgage increase to build our extension, so god knows what the market value it at now.

I think the average cost of a car in the 1980’s was around £4k, now it’s £15k from what I have read.

Our house increase has been great for our mortgage because the loan to value improved and gave us better rates which we luckily did a 5 year deal in 2020 at 1.7%. We also want to do an extension but were offered an 8k penalty for ending mortgage and then a new rate of 5.5% so we are going to have to wait for awhile I think.

The cost of cars in the UK is what's really getting on my nerves at the moment.

We had a BMW 520D M sport on finance for £286 a month in 2016 and that same car now is £550 - £600 a month.
Scrap cars that would be £500 are now £2,000 and people are holding onto their cars for longer now which isn't necessarily a bad thing but as a petrol head I'm gutted.

I had a M2 Competition on order for £48,000 just before covid but I cancelled it due to the uncertain times etc.. now the currently models starts 58k and if add the options on the new model like I did it would be 62k.

If things don't change I can imagine we will be like France and America with people driving round in older cars etc.

 

[pshufd]

Our house increase has been great for our mortgage because the loan to value improved and gave us better rates which we luckily did a 5 year deal in 2020 at 1.7%. We also want to do an extension but were offered an 8k penalty for ending mortgage and then a new rate of 5.5% so we are going to have to wait for awhile I think.

The cost of cars in the UK is what's really getting on my nerves at the moment.

We had a BMW 520D M sport on finance for £286 a month in 2016 and that same car now is £550 - £600 a month.
Scrap cars that would be £500 are now £2,000 and people are holding onto their cars for longer now which isn't necessarily a bad thing but as a petrol head I'm gutted.

I had a M2 Competition on order for £48,000 just before covid but I cancelled it due to the uncertain times etc.. now the currently models starts 58k and if add the options on the new model like I did it would be 62k.

If things don't change I can imagine we will be like France and America with people driving round in older cars etc.

A dealer brought over a new MB to one of my neighbors Friday and they were both parked side-by-side on the street. I asked them if they were going to race and they revved up the engines. The old MB was a 2-seater and he paid about $120K for it 10 years ago. I don't know which model the new one is. I have 2012 and 2018 Camrys and I don't see what the problem is with driving old cars.

My prior car to those 2 was a 2000 Avalon which I traded in for the 2012 with 250K miles on it. The main reason for trading it in was that the wheels were banged up and I didn't feel like buying a new set. The benefits in the 2012 were much lower maintenance costs because the service intervals were a lot longer, better gas mileage, and a bunch of new electronic features.

Modern cars, with proper maintenance, seem to last forever.

I'd like to replace the 2012 but my dealer has no cars. Their current process is to put down a deposit and order one which is a process I don't like.

 

[Apple fanboy]

A dealer brought over a new MB to one of my neighbors Friday and they were both parked side-by-side on the street. I asked them if they were going to race and they revved up the engines. The old MB was a 2-seater and he paid about $120K for it 10 years ago. I don't know which model the new one is. I have 2012 and 2018 Camrys and I don't see what the problem is with driving old cars.

My prior car to those 2 was a 2000 Avalon which I traded in for the 2012 with 250K miles on it. The main reason for trading it in was that the wheels were banged up and I didn't feel like buying a new set. The benefits in the 2012 were much lower maintenance costs because the service intervals were a lot longer, better gas mileage, and a bunch of new electronic features.

Modern cars, with proper maintenance, seem to last forever.

I'd like to replace the 2012 but my dealer has no cars. Their current process is to put down a deposit and order one which is a process I don't like.

Especially when you switch to an EV. Far less moving parts. Hoping mine goes on for a long time.

 

[JamesMay82]

A dealer brought over a new MB to one of my neighbors Friday and they were both parked side-by-side on the street. I asked them if they were going to race and they revved up the engines. The old MB was a 2-seater and he paid about $120K for it 10 years ago. I don't know which model the new one is. I have 2012 and 2018 Camrys and I don't see what the problem is with driving old cars.

My prior car to those 2 was a 2000 Avalon which I traded in for the 2012 with 250K miles on it. The main reason for trading it in was that the wheels were banged up and I didn't feel like buying a new set. The benefits in the 2012 were much lower maintenance costs because the service intervals were a lot longer, better gas mileage, and a bunch of new electronic features.

Modern cars, with proper maintenance, seem to last forever.

I'd like to replace the 2012 but my dealer has no cars. Their current process is to put down a deposit and order one which is a process I don't like.

Yeah I don’t think there is an issue with older cars.. I’m fascinated with high mileage ones! Here in the UK cars are treated like phones with a 3 year upgrade cycle. Because of the current economy people have stopped due to the costs sky rocketing!

 

[dukebound85]

Nope not really. Our house is quite large, in a nice area and costs well above the national average.

Nobody saves 70k a year. Plus house prices (generally) rise more than interest. Especially over the last 15 years.

I left school at 15. Bought a house as quickly as I could. Nearly doubled my money on the first one I bought in a few years.

I still think renting is a mugs game. But am sympathetic to those that can’t get in the ladder. Of course buying property in a cheaper area and renting it out to earn equity whilst you rent elsewhere is another option (one that a friend of mine is doing).

Saving over 70k is not unrealistic for many.