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Housing Affordability Reaches All-Time High

economix.blogs.nytimes.com — One of the upsides of a crashing-and-burning housing market, as Edward Glaeser noted back in October, is that buying a home becomes more affordable.

Who dugg this? Made popular Feb 3, 2009

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  • analogkid01, on 02/03/2009, -0/+57Housing affordability reaches all-time high, while my ability to buy a house has reached an all-time low. Woohoo!
  • LiquidSpark, on 02/02/2009, -2/+59yeah.... things get cheaper when no one has money to buy and banks aren't lending.
  • nextse7en, on 02/03/2009, -0/+42Yeah, all time low, as long as we don't remind people that mortgages used to never exceed 5 years and people could often afford to put half down), and the average price for a home was the equivalent of 1-2 years of middle class income. (and that was with ONE worker per household)


    Ohh! You mean all time low since the creation of the fed allowed for endless inflation and ever diminishing real wages. I get it.

    Its a shame that research isn't required anymore to be a journalist. If one accounts for inflation, middle class housing should average about 100k nation wide, with slight statistical deviation depending on area. Only then will housing prices reflect 100 year statistical norms.

    The banking industry should have a show on CNN called "Pimp your debt" Hey bro! We put an interest rate on your interest rate so you can debt while you debt!
  • JDex, on 02/03/2009, -0/+31There was a time in our history when a just-out-of-high-school-kid could be a gas station attendant and afford to buy a home, get married (to a no income wife) and start a family. Housing Affordability has not reached an All-Time High. People getting paid to inaccurately evaluate statistical data may however be at an All-Time High.
  • PhantomRogue, on 02/02/2009, -6/+29Banks are Lending. They just aren't lending 400,000 to the guy working at McDonalds while his wife is a cashier at the Piggly Wiggly.
  • sidewinderaim9x, on 02/03/2009, -0/+20Doesn't help when you don't have a job.
  • inactive, on 02/03/2009, -2/+22Houses in my city are still 300% more expensive than 5 years ago, but incomes have risen only by 10-20%. How is that more affordable?
  • dreicher, on 02/03/2009, -0/+18So, according to this chart from the National Association of Realtors, affordability at the ABSOLUTE PEAK of the current bubble was 100 and it never went below that number. Buried for B.S. NAR propaganda.
  • X86BSD, on 02/03/2009, -1/+19Wow no *****? Really? GENIUS!
    It's a housing bubble you tool. Homes are *totally and completely insanely* over priced.
    Let the market correct and housing prices come WAY down so that people can actually *afford* them. 300K homes become 100K, 100K homes become 33K. And look what will happen! Excess inventory gets bought up because people can now *afford* them.
    Shocker! But that won't happen because Keynesians rule the roost and FedGov sucks the dick of Keynesians. They are deliberately trying to keep this artificial bubble on home prices high by bailing out all these clowns who bought homes at a super over inflated price that couldn't afford it. Let them drown! So the rest of us can buy homes at an affordable and market tolerated price.
  • broh, on 02/03/2009, -0/+14Before people start buying into this carp, everyone should understand what scumbags work at NAR. They are the spin doctors of the real estate industry, which is already shady in itself. In fact, NAR was bullish on home sales throughout '08 telling people it's a great time to buy.
  • CTK14A, on 02/03/2009, -0/+12Where's the profit in a 50 percent mortgage down payment? How are the banks expected to rape mathematically challenged homebuyers in the keister without year after year of compounding interest?

    I'm sorry, but that's just communism you're talking.
  • Bloodwine, on 02/03/2009, -0/+11well, a rough rule-of-thumb is to triple your salary for your housing cap. So a guy making 80k/year should max out at a 240k house (assuming he has no other income or spouse with income)

    It's the 27/33 rule (or something along those lines).
  • LiquidSpark, on 02/02/2009, -1/+12Agreed. I'm just saying that things get cheaper when there's less money flying around.
  • Nickolassc, on 02/03/2009, -1/+12Good, Now if we can only keep the government out of the housing market. Whenever they get involved in subsidizing, prices are kept artificially high and screw people who don't qualify for the subsidies.

    I pay almost 30% more for food where I live now thanks to food stamps.
  • inactive, on 02/03/2009, -2/+11Considering that I'm stuck on the rent treadmill (I pay a lot in rent, so I can't afford to save much for a down payment, because I pay a lot in rent), means I'm not buying any time soon...

    Before you digger spout off:
    A) I live in the Bay Area
    B) I couldn't afford to buy here anyway
    C) F*ck the area of the country you live in, I like the Bay Area and I'm not moving to Dallas* just because it's cheaper

    * or St. Louis, or Chicago, or Houston, or Tampa, or...well, you get the point...
  • Aadain, on 02/03/2009, -0/+9No money down makes my ARM-sense tingle. Please tell me you didn't get an ARM instead of a traditional 15/30 year fixed rate mortgage?
  • laughtears, on 02/02/2009, -2/+11time to pull the $$$ out from under the mattress...how is anyone who can't buy affording to rent? Freakanomics, I tell you.
  • protodon, on 02/03/2009, -0/+8You know they say this but I'm still not seeing it.
  • inactive, on 02/03/2009, -1/+9I bought my first home, with no money down, and no trouble at all. I am paying what I was paying for rent, so it works out great for me.
  • mfc5200, on 02/03/2009, -0/+7Buried as inaccurate.

    The title should be: Housing affordability goes back to where its average has been since data has been collected

    check out the following graph:

    http://www.investingintelligently.com/wp-content/u ...

    Houses use to cost 3-4 an average workers yearly income, and people would at most take out a 5 year loan (if not just save up and buy houses outright).

    Whats happening now is nothing more than a CORRECTION. Just like stocks can get overvalued and require a correction, so too does the housing market.
  • orlyfactor, on 02/03/2009, -1/+8Well, wtf is a median priced home? Housing prices haven't dipped all that much in Northern NJ, still tough as ***** to get a house up here.
  • edstate, on 02/03/2009, -0/+7You're right.

    And a more obvious parallel is higher education. Once Universities realized that any ***** who scrapes by high school can qualify for half-a-mil in student loans, prices weren't going DOWN.
  • mywhitenoise, on 02/03/2009, -0/+7I am set on buying a house this year, but most jobs don't have a whole lot of security right now...not sure if it's worth the risk.
  • edstate, on 02/03/2009, -0/+7It's propaganda.

    HOUSING HAS FALLEN 20% !!!! OMG!!!!

    But... home prices in some areas went up %500.

    It's a banks, investors, greedy flippers and unfortunate homeowners who are whining to a more-than-willing gaggle of politicians.

    But until housing PRICES (read: not interest rates) come more in line w/ income (average 25% of your take-home for housing), we will be out of whack.
  • petebot, on 02/03/2009, -2/+8Yes, it’s too bad the resale value of your current home is also way down!
  • kgbpimp, on 02/03/2009, -0/+6Where do you live?
  • Nickolassc, on 02/03/2009, -0/+6My parents bought brand new ranch style house in the suburbs in 1996 for 115,000

    2 car garage 3 bedrooms upstairs with 2 bathrooms, a living room, dining room, full kitchen, and an unfinished basement that was the same size as the upstairs.

    I think that's pretty reasonable. Paying 200,000+ for a place to live however, is not.
  • Aliwalla, on 02/03/2009, -1/+7This is why I get so hacked off when I read articles complaining about the 'catastrophe' of falling house prices and the need for governments to prop up house prices. It's ridiculous that people pay a third of their take home salaries on the roofs over their heads. If rent was cheaper then disposable income would be greater. Imagine what that would do to the economy.
  • Y0tsuya, on 02/03/2009, -0/+5Many people making 80k/yr have no savings for a 20% downpayment, so they're getting turned down. It's not just about credit scores and incomes anymore. The days of 100% financing are over.
  • jason210, on 02/03/2009, -4/+9people making 80,000 a year with 800 + credit ratings are also getting turned down for 320,000 dollar loans right now.
  • eastwood24, on 02/03/2009, -0/+5No worries. Eventually housing prices will have to drop low enough to bring buyers back in (i.e you). It's much better to be in your position than someone with an artifically inflated mortgage.
  • dshPls, on 02/03/2009, -0/+5And how much did you pay?
  • GrodyChamp, on 02/03/2009, -1/+6Well it's good news for the people that didn't go out and get 100 credits cards and get themselves in 10's of thousands of dollars in debt while they have an iphone, a beamer, and work retail for $11 an hour, which is about 75% of the population in San Diego.

    Glad I'm house shopping right now!
  • crawfishsoul, on 02/03/2009, -0/+56 months from now will be a helluva time to buy too. And a year from now...
  • pintomp3, on 02/03/2009, -0/+5It's a carp!
  • forrest510, on 02/03/2009, -0/+5Yeah too bad banks won't give you a loan even with perfect credit.I guess they need another TRILLION dollars before they WON'T lend money.
  • Bermygoon, on 02/03/2009, -0/+5Housing 'affordability' is only high because of the variable interest rates on mortages they use to calculate how expensive housing is. The problem is nobody expects rates to stay this low for long, only a matter of time before inflation kicks up from the printing press going on with the fed.
  • Kallius, on 02/03/2009, -0/+5The house prices might be dropping, but rent prices never seem to fall. Of course, I suppose someone has to pay for the landlord being upside-down on his mortgage.
  • CTK14A, on 02/03/2009, -0/+5Nevermind what that did to the value of a degree...
  • Typhoon2009, on 02/03/2009, -0/+5@Bloodwine damn that's pretty bad. I don't think you can find any decent housing in DC for 240K, and 80k/yr is a decent amount to be making too.
  • havemysay, on 02/03/2009, -0/+5oh please, we are not at bottom and it is gambling to buy now. Thats if you can get a bank to back you.And if you still have a job later in the year.
  • edstate, on 02/03/2009, -0/+5Yup. Prices are clinging to artificial highs w/ a kunfu deathgrip. What needs to happen is the Governmnet stays the ***** out of it, lets the market work, and lets prices return to where they're more naturally in alignment w/ income.
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  • inactive, on 02/03/2009, -2/+6houses are STILL too high. I want a relatively new 4 bedroom house with 2 car garage and pool for $100,000. When that's possible, i'll say they're affordable.
  • deadmoo, on 02/03/2009, -0/+4That has always been the case unless you are using a second mortgage.
  • kaelyiesta, on 02/03/2009, -0/+4http://www.comstockfunds.com/files/NLPP00000%5C298 ...

    Red line represents house price/income. One would think that it would be roughly a flat line if unless something very abnormal was influencing the housing market.
  • inactive, on 02/03/2009, -0/+4realistically, I'd wait it out another year. Its going to get uglier by the day. There is TOO MUCH volatility and uncertainty out there. There are, however, very good deals you can find on foreclosed properties and the lending rates are incredible at 4.8 to 5.25 percent now on a 30 yr fixed.
  • mike23w, on 02/03/2009, -0/+4I trust reports from the NAR as much I trust a car salesman to give me a fair price on a used car.

    Well, that's not entirely true, I trust the car salesman more.
  • Zanarkand, on 02/03/2009, -0/+4Yeah the houses are getting more affordable but livinging NJ I can honestly say when combined with property taxes in central and northern jersey it is still very expensive to own a home. There is no reason why a .25 acre lot should have property taxes of $10,000+.
  • Nickolassc, on 02/03/2009, -1/+5Not so long ago people lived within or below their means and had to save up almost 20% or more for a downpayment on a house. The typical family had 1 car and a home with 2-3 bedrooms maximum.

    Then along came big daddy G (government) who decided that it was somehow "unfair" or "racist" for people to live within their means and so they created housing programs that led to the mess we are in today.
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