During the second half of the 1980s, we saw inflation steadily munching away at people’s purchasing power and house prices steadily climbing into the end of the decade.

But those were the “good” times.

And the two short recessions that happened didn’t spoil the good times. By the end of the decade, house prices were 80% higher than in 1979.


I remember how people justified house price increases by going against their own logic and arguments they preached a few years before.

It went like this: when house prices slowed down or grew moderately, and the expectation was that they would go down, it was due to inflation.

Then, when house prices rose, you guessed it, it was due to inflation.

I remember being perplexed at how adults rationalize facts with flawed or incomplete logic.

However, that shock was nothing compared to witnessing their shift in purchasing behavior in the later years. 

House prices went up substantially in the first half of that decade, and by the mid-’80s, most people thought that they were too expensive and unaffordable. “House prices will crash- for sure; they’re too high. I’m going to wait until they drop, and then I will buy my house,” I heard a family acquaintance say.

Yet, by the end of the decade, he bought at a much higher price. 

Can you imagine how he and his family must have felt in the early ‘90s recession?

Like him, many hard-working people felt priced out due to “temporary” inflation and house price rises in the first half of the decade. 

The news said, “House prices are unaffordable,” and it certainly must have felt that way.

They waited and waited as house prices did what they were not supposed to do: stabilize, go up slightly, then decisively, and then more.

They waited until reality was evident enough to undo their well-entrenched “stay put” decision.

As FOMO (fear of missing out) brewed and easier financing made affording homes possible, they borrowed and bought their home by the end of the decade.

If you know your economic history, you know what that means, buying pretty much at the “wrong time.”

And they paid a price for it.

Will History Repeat Itself in the 2020s?

Inflation is moderating in the United States. In May, prices rose by 4% over the previous 12 months.

In response, the Fed has announced that it would not hike interest rates this time.

The events unfolding now remind me of the tune of the mid- to late-‘80s. If that’s correct, where should property prices and the shape of the economic activity be heading into the rest of the decade? 

Let’s look at some pointers.

Right now, inflation is still biting chunks out of disposable income, increasing pressure on households to make ends meet. Or worse, prompting the choice, “eat or heat.”

At the same time, tenants are priced out in some areas as rents soar. House prices were supposed to tumble as interest rates climbed, but they stabilized and recovered ever so slightly.

In the United States, home sales increased 4.1% in April.

As property prices are deemed unaffordable in this still-inflationary environment, I wonder what the 1980s family acquaintance would say…

For those of us studying economic history in the context of the 18.6-year real estate cycle, the landscape should be telling…

Is history about to repeat again? 



Phil Anderson

Editor, Cycles Trading with Phil Anderson

Like what you’re reading? Send your thoughts to [email protected].