Buying a Home Seems Impossible. This Is What Boomers Just Don't Understand

The median home price of $429,100 at a 7.40% mortgage rate tells only part of the story: down payments now nearly equal a full year of household income.

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Whenever someone complains about today's mortgage rates, they inevitably say:

"You think 7.5% is bad? I paid 14% in the 1980s!"

They are right about the interest rate. But they are missing the bigger problem.

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Today's homebuyers aren't just struggling with 7% mortgages. They are struggling with high housing prices that have grown much faster than the amount in their checking account.

Buying a house has become more difficult and expensive. (Kurt Knutson)

Hiding in plain sight is the problem keeping Americans from buying homes.

In 1984, the median new home sold for about $79,900, while the median household income was roughly $22,400. This house price to income ratio is about 3.6 times income. The average 30-year mortgage rate that year was 13.9 percent.

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By 1990, that ratio had risen to about 4.1 times income, and the average new home cost $122,900. In 2000, even with mortgage rates above 8%, it remained about 4 times income.

Then housing prices really decoupled from wages.

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By 2010, the average new home cost approximately 4.5 times the median household income. By 2020, that income nearly quintupled, or $330,900 for a household versus nearly $68,000 for a household.

When someone says, "We had 14% mortgages in the 1980s and we were still buying houses," they're missing half the story.

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Houses were much cheaper relative to family income.

The median available home price in August 2026 was $429,100. The latest median household income for 2025 is $87,460. This figure is about 4.9 times the household income. Meanwhile, the average 30-year mortgage rate hit 7.40 percent on Oct. 8.

So yes, your parents may have a 14% mortgage. But they didn't own a house worth $429,000.

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This may be the part no one talks about enough. A 20 percent down payment on that $79,900 home in 1984 was about $16,000.

Today, 20 percent down on a $429,100 home is nearly $86,000.

That's roughly the average annual household income before closing costs, moving costs, furniture or the first trip to Home Depot.

In 1984, the 20 percent down payment accounted for about 71 percent of median household income. Today, it is approximately 98%. That's a huge pile of cash to raise for a first-time buyer while simultaneously paying rent, student loans, car payments, insurance, and everyday living expenses.

Put 20% down on a $429,100 home today and you're borrowing about $343,000.

At 7.28%, principal and interest payments alone are approximately $2,350 per month. Then add property taxes, homeowner's insurance, HOA fees, and maintenance.

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Today's buyers are simultaneously pressured on three fronts: home price relative to income, the cash needed to get into the home, and the cost of the loan once they get there.

Yes, mortgage rates were worse in the 1980s. But affordability is not a number.

It's about the price of the home, the income to buy it, the cash you need up front, and the interest you pay on anything you can't pay in cash.

And now, all four are making the American dream of home ownership a very expensive one. Just ask my kids

Ted Jenkin is the president of Exit Stage Left Advisors and host of Red, White and Green.

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