Quote:
Originally Posted by GGG
What is the average interest payment as a function of income? That really is the measure of affordability. The natural consequence of low interest rates is higher housing prices but the total monthly payment is unchanged.
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That’s not necessarily true though. Higher interest on a lower principle amount would somewhat even out the interest factor. Mind you amortization periods have increased as well adding additional payments. I agree that it’s not as simple as comparing house prices to income, but it’s also not as simple as comparing the interest rates without taking into account things like down payment amounts and amortizations. One thing’s for sure, the banks always seem to win no matter what. I think if you took most professions and compared what kind of housing people working in those fields were able to afford in the early 90’s and compared that to what a person working in that profession is able to afford today the person working in the 90’s would have the better property relatively speaking.