One persons income compared to 2 peoples incomes made the 70's price increases possible. That additional money makes a huge difference in the ability to pay more. Women being able to get their income added to a mortgage changed the old rules. The average family is not going to suddenly develop a third income to support higher house payments.

We already have adjustable rate mortgages. They have tried 40 year mortgages. The easy solutions are already in place.

Economic review from 1980
Page 6..."Home buyers have been rearranging their budgets in the late 70's in order to afford the regular expenses involved with home ownership. In 1979 46% spent more than 1/4 of their incomes compared to 38% only 2 years earlier."

"One important adaptation to the rising cost of housing is found in the increasing appearance of two-earner households... The second income provided more than 30% of total household income "

There is not much if any extra budget to add more monthly payment with the current lending standards and monthly expenses not related to real estate.

"First time buying households were even more dependent on a second income... It seems clear that the second income mas made it possible to accommodate rising housing costs as a higher proportion of the total household income. Thus the growing importance of the second earner is a major factor in the continued affordability of home ownership."


The fallacy of cheap home prices and the two income trap – dual income households underscore massive housing inflation. Nationwide home prices overvalued by 25 percent.

"Housing inflation has run at an elevated pace since the 1970s and ramped up starting in the 1990s.  Yet what masked much of the pain was access to easy credit but also the rise of the two income household."


Why is it that 2 incomes were not used in the 1960's or earlier?
Women could not borrow money

"it's tough to believe things were as restrictive as they were for women borrowers until the mid-1970s. Women were denied lines of credit and mortgages whether or not they had the financial resources to pay them back by themselves. All credit flowed from the men in the family. Further, women who worked did not havetheir income figured into the borrowing ability of a married couple!"

"Enter the federal Equal Credit Opportunity Act of 1974, which prohibited credit discrimination based not only upon sex and marital status, but also upon race, religion, and national origin. However, it is notable for also introducing the first specific prohibitions against discrimination based on sex and marital status."


history of 30_year fixed rates

"Based on the monthly mortgage data from Freddie Mac, in the 40 years from 1970 until 2010, the 30-year mortgage rate was above 10 percent for almost 11 years. The rate was between 8 and 10 percent for an additional 11 years. That gives 22 years of rates over 8 percent out of the 40-year period. The 30-year rate did not drop below 6 percent for an extended period until early 2003 and then stayed near the 6 percent rate until the financial crisis in 2008."

We should be thinking about house prices in a 8-12% interest rate environment when looking at what a house should cost. When mortgage rates reset to normal we will see them much higher and probably at least in that range.
Lets look at this using historically available interest rates.

A 30 year $100,000 mortgage costs $491.94 a month at 4.25%.
A 30 year  $82,000 mortgage costs $491.63 a month at 6.00%
A 30 year  $80,000 mortgage costs $492.57 a month at 6.25%
A 30 year  $69,000 mortgage costs $494.32 a month at 7.75%
A 30 year  $67,000 mortgage costs $491.62 a month at 8.00%
A 30 year  $56,000 mortgage costs $491.44 a month at 10.0%

Without being able to add a third income for the average family and without incomes increasing we will see 4.25% prices drop to meet buying power. If that goes from $100k today to $56k in a few years at 10% mortgage rate that is how it will be.

I have shown historical interest rates. I have shown the effect of 2 incomes and stretching the budget to buy a house. Both options are exhausted. Only massively inflating incomes as interest rates rise can be a reason for future house prices not dropping.

I hope this has answered the question of why the 1970's were different. The reason is because it really was different.