Monday, November 2, 2009
from a recent FT article. The really interesting graph is the center one which shows housing prices as a percentage of household income. Note how high the current level still is.
Housing is highly sensitive to changes in interest rates, Few people think mortgage rates will fall in the near future from their historically low levels (aided by current fed policy). At a mortgage level of 6% housing has generally been priced at
1.4 to 1.5x household income vs the current 1.9x.
I don't make forecasts here but it is hard to see how we have reached the long term bottom in housing prices.