nfinf.substack.com
Inspired by some of the conversations we had here about the experiences of previous generations (especially with /u/the_nybbler, and yes, I know you're not a boomer), I wrote up a post that challenges a common narrative of how good the boomers had, and how screwed the millennials are. Main point is that the houses were not that much cheaper relative to now, and the interests rates were murderous. Enjoy!
(I'm a regular poster here, but I wanted to separate the identities for opsec purposes).
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Notes -
You are missing something big: as soon as interest rates dropped, boomers could refinance to a lower rate. So that high interest rate was not paid during the entire 30 years of the mortgage. Someone really needs to do the boomer versus millennial home-payment comparison taking refinancing into account. When a millennial is buying the home at rock bottom interests but still having the same payment as a boomer paying a 12% interest rate, the millennial has no prospect of further reducing the payment in a future refinancing.
I wish I could still ask my parents this question. Because they bought a home in 1984, a year after I was born, for $124,000. Guessing off data, their mortgage would have been 13-14%. When I adjusted for inflation, their mortgage was nearly double mine in 2023 dollars. I bought a house for about $500,000 at a <3% interest. And that explains a lot of the hardship my family of 5 had growing up. Constant fights about money. Second mortgages to pay for necessary repairs. Praying the well pump or the water heater would make another season. It wasn't until the 90's that they finally refinanced, and then my teenage years felt like we were on easy street. Went from eating terrible, gristly cuts of steak strictly twice a year, to going out to eat at steak restaurants twice a month.
I'm not sure what delayed refinancing so long. I don't know if my parents simply never thought about it. I don't know if all the debt they had gotten themselves into kept them from qualifying. It's a total mystery to me, and I have no way to ask them.
Regardless, the "bad mortgage" was a boomer trope for ages. It reared it's ugly head in many 90's sitcoms. The Simpsons, Married with Children and Roseanne are all implied to be trapped in "bad mortgages" or otherwise house poor. And I remember in The Simpsons with the Flanders and Married with Children with the Darcys, they wind up with neighbors who bought later than them right next door and seem to be far better off, presumably with lower interest rates.
For years and years, the "bad mortgage" seemed like a bit of forgotten history. I knew a single poor schlub with an ARM or something who's mortgage doubled on him sometime around 2015 or so? Feels like he walked into that one. Only recently with 7-8% rates and prices virtually unchanged am I seeing people really groan under the weight of mortgages that eat up 50% of their income again. And if my childhood was any indicator, all this has happened before, and all this will happen again.
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While that's true, they still had to be able to afford the original mortgage payment. The complaint of millennials is that they can't afford to buy a house now, not that they can technically afford to buy it now but that it's unsustainable to own it more than a few years unless they can reduce their payments. Wile some boomers certainly benefited from interest rates going down, it isn't an assumption you can make at the time of purchase. It should also be noted that this was also a time when lenders expected you to have 20–30% of the purchase price in cash at closing for a down payment. It seems like down payments now are basically a formality. I mean, you need them, but when I suggested paying the traditional 20% for my house the general opinion was "nobody pays 20% anymore".
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