Homes Now More Affordable Than in '80s and '90s
Single-family houses are now more affordable than they were ten or more years ago, according to a recent study by the Federal Reserve Bank of Chicago. The data also tends to refute speculation that a real estate "bubble" could be just over the horizon.
In 2004, the monthly mortgage payment on a median priced home was covered by less than 16 percent of a median household's income. This figure was lower than those of 20 percent and 18 percent for the mid-80s and early 90s, respectively.
As written by senior economist Richard Rosen in the Chicago Fed Letter:
"The increase in housing has come at the same time as mortgage rates have declined and incomes have increased. These two factors have kept housing affordability for the United States as a whole roughly constant as housing prices have increased."
Likewise, other federal officials, including Chairman Alan Greenspan, have stated they do not foresee a national housing bubble that will burst.
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