Is It Harder to Buy a House in Today’s Real Estate Market Than It Was For Baby Boomers in the Early ’80’s?

If you’re in one of the younger generations, buying a house right now likely feels pretty difficult, if not impossible. If you’re like a lot of younger people, you probably feel like the best chance you have at avoiding becoming a “forever renter” is to hit the lottery. (And not one that pays out a few thousand bucks. We’re talking mega millions…)

It’s easy to feel like this might be the worst time in history to buy your first home when so many younger people are facing historically high home prices, mortgage rates that have gone up quickly and considerably in a short amount of time, and often have a lot of student loans to pay off with salaries that aren’t stretching as far due to inflation.

So when a Baby Boomer (or a real estate agent) starts throwing around how interest rates were 18% back in 1981, it comes across like they’re trying to make it sound like it was tougher back in their day. It’s the real estate equivalent to claiming they walked 10 miles to school, barefoot, uphill both ways, in a blizzard. It sounds like an exaggeration they use just to minimize how tough you truly have it.

Sure, as Baby Boomers (or agents) like to point out, interest rates back in the early eighties were sky high…

…but, as the current younger generations like to point out, houses also cost a lot less back then!

Both generations have valid points of view, so which generation is right about it being a more difficult period to buy a home?

Perhaps the better question is: Does the truth even matter if you feel like owning a home is too expensive and unattainable now

Apparently, it actually was more difficult for Boomers to buy a house back in the day!

According to this Yahoo Finance article, a recent analysis of historic home prices, income levels and mortgage rates found that the toughest housing market for first-time buyers was in the early 1980’s.

That assessment isn’t just based upon the fact that mortgage rates were more than double the current rates, but also these factors:

• The average loan payment increased by 34% in one year in 1980.
• The typical mortgage payment for Baby Boomers buying their first house took up 33.2% of their income, as compared to 22.5% for Millennials, 22.6% for the Silent Generations, and 25.8% for Generation X.
• While mortgage companies prefer home buyers to have a debt-to-income level of below 28% — which is how much of a person’s monthly income goes to paying their debts — there are times where it goes above 30% in each generation. However, the ratio reached an all-time high of 53.69% in the third quarter of 1981.
• Even though they did not have as much student loan debt, the job market and unemployment was worse at that time.

So, technically speaking, it was more difficult for Baby Boomers to buy their first house than the current younger generations.

It Gives Perspective and Hope to First-Time Buyers

But back to the question posed above: Does it really matter if you feel like the economy and odds are stacked against you buying a house in the early 2020’s?

The short answer is, probably.

It’s not that you can prove or disprove that it matters with data. It’s more of a mentality issue — if you think homeownership is unattainable, it’s certainly not going to help you become a homeowner.

Whenever the topic is discussed, there are always people in the younger generation who get defensive, and try to give reasons why it’s actually more difficult for them to buy a house right now. This would probably hold true whether the statement referred to the year 2024, 2004, 1994, 1984… or any other year. Buying your first house is almost always relatively difficult for any person, in any generation. As the saying goes, if it were easy, everyone would do it.

On one level, it may be annoying to hear that Baby Boomers did in fact have a more difficult time buying their first home. But the real takeaway should be that so many of them did buy a house, even though it wasn’t easy for them to do.

If you feel like it’s an attack when people try to offer perspective on how buying a house isn’t the most difficult or impossible thing to do, and you’d rather try and prove to them (and yourself) that it’s the worst time in history to try and buy a house, you’re entitled to feel that way.

But if you’re looking for hope that becoming a homeowner is possible for you, these recent findings should be plenty of proof that first-time buyers somehow manage to buy a home in even the toughest markets. And it’s probably pretty obvious how well that worked out for Baby Boomers who did so back in the eighties…

The Takeaway:

Buying a home right now feels nearly impossible for younger generations facing high home prices, rising mortgage rates, and student loan debt.

While it might be annoying when Baby Boomers claim it was tougher back in their day, recent analysis confirms it actually was more difficult for them to buy a house in the early 1980s due to skyrocketing mortgage rates and a higher debt-to-income ratio. Despite these challenges, many Boomers still managed to become homeowners.

The key lesson? Buying your first house is often difficult, relative to the current economy and real estate market, but it’s not unattainable. If Boomers could do it in what was the most difficult market historically, there’s hope for today’s first-time buyers