From Fortune:



Mark Fleming, chief economist with First American, states that during times of economic stress, human nature dictates that we compare the present to the past. The housing market currently seems similar to that of the 1980s, when rapid inflation and rising interest rates were prominent. This is in contrast to the Global Financial Crisis of the 2000s, where loose lending standards and highly leveraged homeowners defined the market. Although today’s 8% mortgage rate seems significantly lower than the 18% rate of the 1980s, the relative impact on buyers is comparable. This, combined with demographic changes as the millennial generation enters their prime home-buying years, has led to a major lack of inventory, further contributing to today’s housing market challenges. The lock-in effect, where homebuyers hold onto their properties to keep historically low interest rates, has been exacerbated by inflation. This, in turn, makes it more difficult for renters to transition to become homebuyers. The process of baby boomer downsizing is expected to occur slowly, over the span of about two decades. Overall, the housing market of today is markedly different from that of past decades, but the echoes of the past still haunt buyers.



Original: The housing market this holiday season looks a lot like decades past