Ep. 199 – Boomer’s Homes Were CHEAPER – Plus Credit Pull Myths! 

 July 12, 2023

David is back to help explain a couple important things. First, everyone is complaining on social media (as they like to do) about the price of homes and how they “can’t buy a home the way the Boomers did because the prices are out of control.” Second, he’s going to (again) talk about why it’s so important for you to get your credit pulled months before you’re ready to buy a home. So, buckle up as David dispels even more real estate myths in this episode.

Here are some power takeaways from today’s conversation:

  • Why it’s actually hard to buy a home these days
  • The numbers behind the problem
  • Rent to mortgage ratio
  • Why you should have your credit pulled

Episode Highlights:

[01:35] Don’t Miss the Facts

The wage gap and number of people living paycheck to paycheck definitely makes buying a home difficult. But, when it comes to housing, the math shows that there is another problem. In 1980 the average home price was $50,000 which translates to $184,000 in today’s economy. Well, we know you can’t get a house for that price pretty much anywhere today, but ten years ago, you could. So, here’s the biggest difference: in 1980 the average rent was $300. Today, the average rent is $2,000. This number shows the real disparity between the generations. So, it’s not the wage gap that’s the problem, it’s the crazy inflated rent prices. The key variable is the mortgage to rent ratio – how doable is it to swap a monthly rent payment for a mortgage payment?

[11:23] Look at the Numbers!

Interest rates are also a huge factor. In 1980, you could pay $300 for rent, or you could pay $700 a month for a house with 5% down. That would be an over 250% jump in your monthly housing payment! In 2023, you can do the same thing where you change from paying $2,000 a month in rent to $3,200 in a mortgage payment. That’s only a 60% increase, not a 250% increase like it would have been in 1980. So, is housing affordability unfair right now? If you’re just looking at home prices, yes. If you look at the whole picture, then the answer is more complicated.

[17:34] Pulling Credit Scores

One of the biggest myths David is dispelling today is that your credit score will get hurt by having it pulled before buying a home. Well, nobody needs to pull your credit score to help you plan . There’s something called a “soft pull” that will help you and the right lending team will use this strategy to help you. This will get you an idea of what you should do to prepare to buy a home. And, yes, you SHOULD get a soft pull months in advance of buying a home so you know how to properly prepare. This myth makes people wait to start planning out of fear, causing them to miss out on more time and more money.

You Might Also Be Interested In:

Ep 217 – Interview With Millie – How To Buy Your First Home Before Turning 30
Ep 218 – Interview With Brian Friedman – How And Why Creatives And Artists Should Buy Instead Of Rent
Ep 215 – That ADU Guy Interview – The Ultimate House Hacks To Make Buying Affordable
Ep 216 – PMI Is Still A Privilege And Still Not The Devil