By Mike Bodeen · 3 August 2026
Residential Real Estate May Never Be the Same
I’ve been writing real estate columns and articles for 50 years. Yep, I started right out of the gate as a green Realtor rookie at the tender age of 22, sharing my real estate thoughts and opinions with our clients. Yeah, I didn’t know squat until I began earnestly following national and state real estate news and legal decisions, often through a legal/real estate publication known as “First Tuesday.”
In 1978, the 30-year mortgage rate was just under 10%. The market was slowing and eventually mortgage rates climbed to 18.63% in the early ’80s. Mideast tensions including the Arab oil embargo, the Iranian Hostage Crisis, and rising inflation were the news.
As mortgage rates became more expensive, slowing sales, a seemingly insignificant court case known as Wellenkamp vs. Bank of America temporarily changed the way the real estate industry was able to get by and make sales, given the non-affordability of typical 30-year loans. For many of us in our real estate careers, it helped us get by, survive, and stay alive in a profession we loved.
The very short story result of Wellenkamp vs. Bank of America allowed most existing loans to be assumed or taken “subject to” an existing mortgage loan and interest rate on the property, avoiding having to get a new loan at the much higher mortgage rate. Before Wellenkamp, the lender had the right to foreclose on a seller using what is known as a “Due on Sale” clause, still used in most all mortgages today.
As an example, if a seller was selling their home for $100,000 (in that day, a lakefront home in Lake Tahoe) a buyer could offer the seller 20% down ($20,000), assume the existing 8% loan of $50,000, and request the seller to carry back a “junior lien,” aka a 2nd mortgage, for the balance of the purchase price ($30,000) at say 8%. This junior loan would often be all due and payable, with a balloon balance, in 5 years. This was called “creative financing,” of which many types came into existence from that era.
“A recent Bankrate survey showed 67% of Americans feel rates will rise, 22% that they will stay the same, with the remaining 11% thinking they will go lower.”
We did finally come out of that period of global tension, high oil prices, rising inflation, etc., and then rates simmered down as you can see by the following chart:
Déjà vu — 45 years later, the U.S. finds itself in global tensions, high oil costs, and rising inflation, plus a war with Iran.
For almost 4 years, mortgage rates have remained in the 6%-7% range, contributing to price stagnation, and in Phoenix, a buyer’s market. Buyers and sellers both await mortgage interest rate reductions to move on. Oh, there may be brief interludes of lower rates, but there could also be further rate increases beyond where they are now. Last week they moved up again.
A recent Bankrate survey showed 67% of Americans feel rates will rise, 22% that they will stay the same, with the remaining 11% thinking they will go lower.
The point of this two-part article is my “opinion” that higher rates with fewer sales are now our “new normal.” Next week, I’ll attempt to make the case that where we are currently is where we may be continually.