The Massive Affordability Trend Hits 75 Percent

A good gauge of prices looks good at 75 percent and looks to have a better good future.

The Housing Opportunity Index measures housing affordability by tracking price against median income – now at $64,400 (See chart below).

At the bubble high in 2006 only 40 percent of homes were affordable to the median-income family. Now we are at 75 percent and rising.

You will never guess who has been working to stop this growing trend toward affordability. It’s your federal government obviously.

“Since the housing market began to turn in 2007, Washington has tried to keep prices from falling with every policy gimmick known to politics: Foreclosure mitigation, more guarantees from the FHA, higher guarantee thresholds from Fannie Mae and Freddie Mac, Fed purchase of mortgage assets, and the $8,000 home buyer’s tax credit … “ (The Housing Illusion, WSJ)

The editors at the Wall Street Journal suggest money is better spent elsewhere on “capital investment in plant and equipment, new ideas and new companies.”

That would be a money-for-jobs program. Not the money-for-bubbles thing which has been so successful and so destructive.