The New York Times has a story out about how housing costs less, as a percentage of income, than it did 20 years ago.
Nationwide, a family earning the median income – the exact middle of all incomes – would have to spend 22 percent of its pretax pay this year on mortgage payments to buy the median-priced house, according to an analysis by Moody’s Economy.com, a research company.
The share has increased since 1998, when it hit a low of 17 percent before house prices began rising sharply in many places. Although the overall level has reached its highest point since 1989, it remains well below the levels of the early 1980’s, when it topped 30 percent ….
… Even in New England, where the soaring prices of the last decades have frustrated many young families, house values have still not reached the heights of the early 1980’s, when calculated as a share of income.
How is this possible??!!
Because of low mortgage loan rates and higher incomes.
Remember, home ownership is at its highest point, ever, increasing to over 70 percent of households, currently. (The Times says 69%, but I’ve heard higher.)
Complete article: Twenty Years Later, Buying a House Is Less of a Bite – By David Leonhardt and Motoko Rich, The New York Times