Daily we hear a lot about housing prices and interest rates. That caused me to think about the past home prices that I’m familiar with – my parent’s homes and home purchases I’ve had.
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In the early 1920′s my parents purchased a 20-yr old home on 10 acres in Knox County for around $1500 as I recall them mentioning.
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In 1972, my husband and I purchased a 12-yr old, 3BR ranch on 3/4 acre in Marysville for just under $25,000. Our interest rate was 8.5%. (For comparison, in 1971 we purchased a new, full-sized Chevy Impala for around $3500!)
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In 1976, we purchased a custom-built new 3BR ranch in Marysville for $46,000. Our interest rate was 11%. That was just before rates eventually rose to 16%-21% and 3-yr balloons kicked in with no caps!
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In 1987, I had a home built in Powell for $86,000 with an interest rate of 8.25%. (Again for comparison, I purchased a new ’89 Jeep Cherokee for $18,000).
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In 1995, I purchased a home in Tucson, AZ for $114,000 with an 8.75% rate.
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In 1997, I returned to Ohio and purchased my current home in Delaware County for $159,000 with a rate of 8.25%. I later refinanced at a 5.125% rate when rates dropped.
What is not considered with these prices, are the increases in average national household income over the years. I buy conservatively, so it’s likely if I calculated the average national household income over those years, that most likely that average income rose at a greater rate than the average price of homes.
The key take-away from the above is how low the current interest rates are relative to historical rates.
Here’s a fun video where the historical home prices since 1890 have been graphed into a roller coaster ride. The date is written in the lower right of the video frame but it’s a little hard to read because it’s obscured by the YouTube logo. It would be fun to see a side-by-side “ride” of the average income which would illustrate “affordability”. Hope you don’t get queasy watching it!
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I’d like to see that ‘side by side’ too, Elaine! You model good purchasing behavior, especially in this market. But I daresay that buyers who buy now and keep their homes as homes without expecting to sell in two yrs and make a profit will fit into your model quite well!
Yes, Carole, how many times have we said that a home shouldn’t be used as an ATM.