Houses

 

At the end of the second quarter of 1989, the median sale price of homes in the U.S. was $118,900. Thirty years later, the median home sale price was $320,300, representing an increase of 169%, much greater than the overall price growth during that period of about 107%. 1989 was a year of high interest rates, though, with typical mortgage rates near 10% or 11% for 30-year fixed-rate loans.

 

If you bought a $120,000 home and paid 20%, or $24,000, down, you’d be taking out a loan for $96,000, which, with an interest rate of 10%, would cost you about $840 per month. In today’s dollars, that would be close to $1,735.

 

Meanwhile, if you were to borrow $96,000 today, paying a representative 4.25% current interest rate, your monthly payment would be only $472, fully 44% less than the $840 demanded by the 10% interest rate of 1989!

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