[quote=AN][quote=pri_dk]You mean like the 10%+ inflation in the late 1970s/early 1980s? – Whatever happened to that?[/quote]
I wonder what happen to nominal housing prices during the 70s. I could have sworn it drops less than 2-3%/year.[/quote]
AN is right–we had rapidly rising inflation in the 1970s, climaxing at about 13% in 1980, and tamed only by the new Fed Chairman Paul Volcker, who imposed super-tight money, put the economy through a deep recession, and conquered inflation, which later in the 1980s fell to low single digits.
But it was painful medicine. Try to calculate your monthly housing cost with a 15% mortgage.
As to housing prices during that period, they climbed along with inflation, and subsequently fell with the onset of high interest rates and recession.
Interestingly, people were still clamoring to buy even with the high interest rates, which shows the importance of inflationary expectations. If you expect inflation to go from the teens to the twenties, you try to buy a house, even with a 15% mortgage. It was a crazy time.
