Today's Housing Market Echoes 1980s As High Rates Cool Demand Among First-Time Buyers

Bank of America economists say today's housing market is more like the 1980s than 2008. Similiarities include high inflation and interest rates.

In the 1980s, inflation hit 14.8% leading the Fed to raise rates. Mortgage rates were 9-18%. Baby boomers were buying homes.

Today inflation hit a high in June 2022 so the Fed raised rates. Mortgage rates nearly doubled to over 7%. Millennials are trying to buy homes.

Home prices and demand rose in the 80s and today. Sales of existing homes have dropped both times.

Key difference is leverage - mortgage debt to income is higher now but household balance sheets are strong.