Home Price-to-Income Ratios

#1

Post by alexhutcheson » Wed, Jan 29, 2020, 10:21 PM UTC

Home Price-to-Income Ratios
jchs.harvard.edu

Re: Home Price-to-Income Ratios

#2

Post by starpilot » Wed, Jan 29, 2020, 10:58 PM UTC

https://en.wikipedia.org/wiki/Matthew_effect

Re: Home Price-to-Income Ratios

#3

Post by ianmobbs » Wed, Jan 29, 2020, 11:04 PM UTC

I wonder if this is due to stagnant wages, excessive home price inflation, or both.

Re: Home Price-to-Income Ratios

#4

Post by bequanna » Wed, Jan 29, 2020, 11:06 PM UTC

Comparing income vs median sales price across time isn’t quite as interesting as income vs. total monthly payment (principal + interest).

Re: Home Price-to-Income Ratios

#5

Post by weaponizedwords » Wed, Jan 29, 2020, 11:06 PM UTC

Anyone know what caused such a jump around 2001-2003?

Re: Home Price-to-Income Ratios

#6

Post by ldayley » Wed, Jan 29, 2020, 11:08 PM UTC

weaponizedwords wrote: post #5

Anyone know what caused such a jump around 2001-2003?

Post dotcom bust and 9/11 interest rates were dropped significantly to spur consumer spending.

Re: Home Price-to-Income Ratios

#7

Post by weaponizedwords » Wed, Jan 29, 2020, 11:10 PM UTC

ldayley wrote: post #6

weaponizedwords wrote: post #5

Anyone know what caused such a jump around 2001-2003?

Post dotcom bust and 9/11 interest rates were dropped significantly to spur consumer spending.

interesting, so interest rates go down and prices go up then?

Re: Home Price-to-Income Ratios

#8

Post by bequanna » Wed, Jan 29, 2020, 11:10 PM UTC

ldayley wrote: post #6

weaponizedwords wrote: post #5

Anyone know what caused such a jump around 2001-2003?

Post dotcom bust and 9/11 interest rates were dropped significantly to spur consumer spending.

Right. Without factoring in interest rates, this doesn’t really tell us much about how affordability has changed.

Re: Home Price-to-Income Ratios

#9

Post by ldayley » Wed, Jan 29, 2020, 11:12 PM UTC

weaponizedwords wrote: post #7

ldayley wrote: post #6

Earlier quoted context omitted.

Post dotcom bust and 9/11 interest rates were dropped significantly to spur consumer spending.

interesting, so interest rates go down and prices go up then?

Lowering interest rates makes borrowing cheaper, and it has the effect of putting more money to work faster. It’s one of the basic tools of economic policymakers.

Re: Home Price-to-Income Ratios

#10

Post by swiley » Wed, Jan 29, 2020, 11:12 PM UTC

starpilot wrote: post #2

https://en.wikipedia.org/wiki/Matthew_effect

Yes but we also artificially make it worse with the way we build and sell housing.