tag:blogger.com,1999:blog-11719208.post4831512205423964502..comments2023-11-05T04:36:14.223-08:00Comments on The Mess That Greenspan Made: Existing home prices and median incomeTimhttp://www.blogger.com/profile/16530974968126497397noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-11719208.post-38666977187492883662009-01-22T07:43:00.000-08:002009-01-22T07:43:00.000-08:00As an economy expands, we would expect housing to ...As an economy expands, we would expect housing to take a smaller and smaller portion of income. Having median house-income ratios increase is decidedly bad for an economy unless inflation is permanently contained.jessehttps://www.blogger.com/profile/02155122147972263497noreply@blogger.comtag:blogger.com,1999:blog-11719208.post-72350526220629118592009-01-21T12:33:00.000-08:002009-01-21T12:33:00.000-08:00If we see "a major decline in income", we may as w...If we see "a major decline in income", we may as well all just slit our wrists now. That's the end of the world, Great Depression II style.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-69145071430220721392009-01-21T12:31:00.000-08:002009-01-21T12:31:00.000-08:00A chart of price-to-income ratios and mortgage rat...A chart of price-to-income ratios and mortgage rates has been added above.Timhttps://www.blogger.com/profile/16530974968126497397noreply@blogger.comtag:blogger.com,1999:blog-11719208.post-46540251808385759392009-01-21T12:02:00.000-08:002009-01-21T12:02:00.000-08:00The rising trendline in price/income can be explai...The rising trendline in price/income can be explained by an increase in overall debt levels; from ~100% of GDP to >300% of GDP today. As Mathlete has said, the chart does not yet reflect the major decline in income we are only beginning to experience. A further 13% drop in home prices is very optimistic.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-74069991923011223892009-01-21T11:36:00.000-08:002009-01-21T11:36:00.000-08:00Wages will stagnate and we probably hit or move be...Wages will stagnate and we probably hit or move below the bottom in the 1980s, when rapid economic growth and real estate collapse caused a dip. <BR/><BR/>If the ratio falls to 3.25 and wages dip to 50,000, that's 162,500, or a drop of 10-13% based on your numbers.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-31453801352469125762009-01-21T11:35:00.000-08:002009-01-21T11:35:00.000-08:00I think if you add a line to also track typical mo...I think if you add a line to also track typical mortgage rates you will see that the "ratio" goes up when mortgage rates go down and vice versa.<BR/><BR/>My thesis is that both income and rates need to be factored as the average uninformed lemming only considers how big a payment they can make. IMHO most folks care much more about the "right now" then they do about their "tomorrow".Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-11719208.post-50913672321474833792009-01-21T11:28:00.000-08:002009-01-21T11:28:00.000-08:00If this data is correct, the price to income ratio...If this data is correct, the price to income ratio is certainly not a constant - it's been rising steadily for many years and now seems to be back at the trendline. The bigger question is whether we are undergoing a major change in the trendline due the bursting of a 30 year credit bubble. <BR/><BR/>- Gene W.Anonymousnoreply@blogger.com