The American housing market is stuck in a rut—again. Just like in the early 1980s, when disco ruled the airwaves and mortgage rates hit jaw-dropping highs, buyers today are grappling with rising interest rates, unaffordable home prices, and a painfully limited supply of listings.
Sound familiar? That’s because it is. We’ve been here before—most notably in 1981. But while there are striking similarities between then and now, there are also major differences that suggest we’ll need new tools, not just historical comparisons, to find our way out.
In 1981, the housing market was reeling. Mortgage rates soared to a jaw-dropping 18.63%. Compare that to today’s high of just over 7% and you might wonder why we’re complaining—but context is everything. Home prices today are far higher relative to income, and buyers now are just as sidelined as they were then.
Just like in 1981, the Fed is battling inflation with aggressive rate hikes. And just like then, we’re seeing the impact play out fast: existing home sales have plummeted nearly 30% over the last year. Buyers are hesitating, and sellers are clinging to their 3% mortgage rates with understandable reluctance. It’s a classic case of rate lock-in.
Here’s where the paths diverge. In the early ’80s, buyers and sellers had creative workarounds that softened the blow of high interest rates—most notably, assumable mortgages. These allowed buyers to take over a seller’s existing loan (often with a much lower interest rate), making homes affordable in an otherwise impossible market.
In fact, assumable loans were so common they became a marketing hook: “Take Over 8% Loan!” was a selling point in newspaper classifieds. Today, most conventional mortgages are not assumable. Only government-backed loans (FHA, VA, USDA) allow for this kind of transfer, and they make up less than one-fifth of new originations.
Back then, these assumable loans were also part of a broader culture of “creative financing.” Contracts for deed, wraparound mortgages, and seller financing kept deals alive when banks wouldn’t. That era’s flexibility helped prevent a total market freeze—but it also carried serious legal and financial risks that regulators have worked hard to reduce.
We can’t assume the same tools will work today, because they no longer exist at scale. The question becomes: What new solutions can we create?
Could technology lead the way—co-ownership platforms, 3D-printed homes, shared equity agreements? Could regulatory reform bring back assumable loans in a safer, smarter way? Or will it take a complete rethinking of how Americans finance and live in housing?
No one knows exactly what the fix will be. But here’s what we do know: markets are cyclical. Mortgage rates eventually fell after 1981. In fact, they dropped into the single digits for good by the early ’90s, and we even saw sub-3% rates as recently as 2021.
In other words, it won’t be like this forever.
Bottom Line:
Yes, history offers perspective—but it won’t provide the blueprint this time. That’s up to us.
Whether you’re a buyer, seller, investor, or industry professional, now is the time to think creatively, act cautiously, and stay informed. If there’s a path forward, we’ll have to build it—together.