re: What's the deal with PMI these days when purchasing a new home?

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Back then (50s-80s) I don't think interest rates fluctuated with the magnitude and frequency that they do today (relatively speaking that is....and I could be completely wrong), so that may have played a part in the development of this rule of thumb.

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I'd suggest revisiting history of the mid-80's and find short term rates rose north of 15%, we had an inverted yield curve, and inflation was ridiculous compared to the past decade. Artificially low rates due to Fed policy is what has, in large part, caused such a significant rise in housing costs compared to median incomes.