Prices, rates close to making me relive my youth

Remember when the price for a barrel of oil was actually below zero? Remember when interest rates were real close to zero? It wasn’t really that long ago, but it seems so distant.

These fellers that call themselves the Fed are working hard to make me relive my youth. They’re doing a pretty good job.

According to a New York Times story on Thursday, mortgage rates had stormed past 7% for the first time since 2002. That meant that the national median mortgage payment had risen to $1,941. I personally only ever had one mortgage payment above $1,000, but without kids we never needed too big a house.

That same story points out that since the first of the year that median mortgage payment has risen a whopping 40%, or $558. That size increase in home payment means you can’t afford that F-150 payment, even if you can find one to buy.

When I talk about reliving my youth, I have to point out that I chose to get married and buy my first home in 1982 just as mortgage rates were spiking as high as 18% in some cases. But we were young and stupid and didn’t know we couldn’t afford to buy a home. Fortunately we were resourceful and a little lucky too.

As newlyweds we probably would have had a hard time qualifying for a conventional loan even if we could have afforded it. Fortunately there were sellers with property in our price range willing to finance the right buyers. We thought that 12% mortgage rate was wonderful and it was at that moment in time. The $300 payment was less than our two combined rents and I was only paying for a mobile home site rent.

The 1980s were good to us. We were both making good commissions for the day and we never had a problem affording a vacation and traveled overnight at least one weekend a month. We weren’t living large, but we were comfortable and making extra principle payments nearly monthly on the backside of that owner-financed note.

That strategy allowed us to pay that mortgage off in just a few years and turn right around and owner-finance the place when we sold it at the same rate because the buyer had a bankruptcy in his past and didn’t have a choice. He was steady and refinanced a few years later after his credit repaired. That place treated us well on both sides of the deal.

The crazy hot real estate market we’ve had here until late summer has totally mystified. The interest rate rise has thrown cold water on that for now. I’m really worried that we’re going to get way too close to that rate we paid on our first home before this thing is over.

It’s a shame that so many young homebuyers are going to be priced out of the market by an overpriced inventory and high interest rates. At least we didn’t have to deal with big prices way back when.

Karl Terry writes for Clovis Media Inc. Contact him at:

[email protected]