Sorry, CA Renter, but I don’t think assumable loans were that big a factor in the real estate price runup in the late 1970s. The idea of carrying back a second TD was just too uncomfortable for many sellers. They were afraid they wouldn’t be able to unload it, and they were frightened about the discount they would have to take.
Instead, the price runup was because of the understandable panic people felt due to mounting inflation. The pessimism about our country’s future then was palpable, and the anger against President Carter and his lackey Fed chief fueled the appetite for inflation hedges such as gold (at $800/oz.) and houses. Remember also that Proposition 13 was passed in 1978, adding fuel to the fire. Carter finally got a backbone and appointed tough-guy Volcker to head up the Fed, who was willing to put the economy through the high-interest rate ringer in order to slay inflation. Reagan was elected over the hapless Carter. The economy briefly stayed in its deep tight-money slump, until people realized were not going to turn into the Weimar Republic, then exploded with 8% growth out of the recession. Real estate stayed fairly flat for the first half of the 1980s, then heated up for the second half, peaking around 1990.
