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I don't have it handy at the moment, but apparently housing is still more affordable than in 2008. The key factor is that mortgage rates now are roughly half of what they were during the bubble, so a given monthly payment will buy more house today.

Depending on the local jurisdiction and price, this could mean that houses are 20% more affordable today than in 2008, modulo down payments.



I calculated the monthly payment inflation adjusted using 30-year interest rate and it looks lower than 2008.

Chart: https://fred.stlouisfed.org/graph/?g=GMT0

Formula used: https://www.wallstreetmojo.com/mortgage-formula/

Fred formula:

a = Median Sales Price of Houses Sold for the United States (MSPUS)

b = Consumer Price Index for All Urban Consumers: All Items in U.S. City Average (CPIAUCSL)

c = 30-Year Fixed Rate Mortgage Average in the United States (MORTGAGE30US)

a/b * (c/100/12) * (1+c/100/12)^(30 * 12) / ( (1+c/100/12)^(30 * 12) - 1)

PS: Similar could be said for everything (e.g. stocks). Buying an overvalued asset using debt might be cheaper than before.


>I don't have it handy at the moment, but apparently housing is still more affordable than in 2008.

this? https://awealthofcommonsense.com/2021/03/what-if-housing-pri...


That's exactly the one! The last graph ("Inflation-Adjusted Monthly Mortgage Payment") is the key takeaway.


Fair enough, but that implies there may come a day when mortgage rates are much higher and then housing for new buyers is not at all affordable.

Homeowners that locked in 30-year fixed rates might not be too concerned at first. But eventually, even they may need to move or sell someday. Wages or buying power will need to catch up to avoid some downward price pressure.




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