Housing prices continue to approach historical affordability levels as demonstrated in the chart above (note: I have defined "affordability" as median home prices divided household income). While rising unemployment and increasing foreclosures will likely drag down prices further, it is comforting to see that prices are reaching "fundamentally" healthy levels. Further, extremely low mortgage rates should continue to provide some downside support to house prices.
Monday, March 23, 2009
Housing Affordability as of February 2009
Housing prices continue to approach historical affordability levels as demonstrated in the chart above (note: I have defined "affordability" as median home prices divided household income). While rising unemployment and increasing foreclosures will likely drag down prices further, it is comforting to see that prices are reaching "fundamentally" healthy levels. Further, extremely low mortgage rates should continue to provide some downside support to house prices.
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