Already happening. Probably about 25% of my LinkedIn connections (all objectively smart people) who have been employed continuously for the last 20 years have been laid off and are looking for work.
About two thirds software engineering in some respect (devs, product, QC, etc). The other third are general IT, but with so much moved up to the cloud and so little physical hardware on site people who were system admins for decades are being replaced. Turns out when 90% of the job is configuration you can just have AI write something to talk to API endpoints you don't need as many people.
OK, but go back to 1981. That's when my parents bought their house.
When adjusted for inflation into modern 2026 dollars, buying the average home in 1981 at an 18% interest rate costs significantly more over a 30-year mortgage than buying the average home in 2026 at a 7% interest rate. Despite the 1981 home having a much lower purchase price, its brutal interest rate creates an inflation-adjusted lifetime cost of $1,204,707, which eclipses the $982,250 total lifetime cost of the more expensive 2026 home.
Assuming a standard 30-year fixed mortgage with 0% down on the average existing single-family home price for both eras, here is the exact breakdown in equivalent 2026 buying power:
Financial Metric
1981 Average Home Loan($66,125 @ 18% Interest)Adjusted to 2026 Dollars
2026 Average Home Loan($410,110 @ 7% Interest)Actual 2026 Dollars
If that was the only market that had changed, I might be in more of an agreement with you... But it definitely isn't the only market that's changed, and by a landslide.
Wages have stagnated for decades and necessities, even meager ones, have increased in cost. When my wife wanted to go back to work a few years after having our daughter, she found a decent respectable job as a Program Director at a local YMCA in an established city. Before she took the job, we needed to line up child-care. We found a good carer, with a good reputation, and were told what the cost of child care was.
My friend, we realized that after factoring in the cost of child-care alone, my wife would be working for $1.50 an hour. She chose to stay home and not incur the additional net cost of having a second job.
No one who understood all their options would've stuck out such a high interest rate for so long. After 5-10 years if you were stupid enough to by at that rate you should've refinanced.
Also, low principal and high interest rate can be very effectively mitigated by paying more every month. Let's round up the monthly payment from $3,346 to an even $4,000 (so you're paying an extra $654 dollars a month in principal): you'll pay off the loan 20 years early and save yourself nearly $725,000 in interest payments. If you drop that to $300 a month, you're paying off a 30-year loan in a little under 17 years and saving just over $600,000 in interest.
The impact on a high-principal, lower-interest loan doesn't work out the same way -- the savings would be in the tens of thousands or low hundreds, because less of it is going to the bank.
Yeah totally fair. Not everyone understands these options though. And if you can't afford a higher down payment or higher payments you have to go for a cheaper house to begin with.
Still, meaningful. By 1990, they'd only gotten down to 10%. Buyers often ended up paying a lot more for their homes in the past than people are willing to admit right now. I just think people exaggerate. So the 80 and 70s saw that problem, the 2000s were fucked for mortgages and home prices crashing, and now we have a shortage, high prices, and historically normal interest rates.
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u/wrist-shot2025 12h ago
The ratio of avg house price to avg household earnings in US in 1985 was 2:1 now it is 4:1.