The National Association of REALTORS, which appears to exist primarily to tell people that it's always a great time to buy a house.
Ritholtz has attacked the NAR for many sins over the years, and this time he aims at the group's "housing affordability index."
This index looks at the combination of house prices, mortgage rates, and incomes, measuring how much the average house would cost someone with an average income. As Bloomberg dutifully reported, when you look at housing affordability that way, you can conclude that house prices are the "cheapest in 40 years."
Of course, this measure depends entirely on record-low mortgage rates. If mortgage prices were to tick up to even average levels, houses would suddenly become a lot less "affordable." And the index ignores the fact that so many homeowners are underwater or over-indebted and thereby in no position to buy a house.
A better way to look at house prices, as Ritholtz observes, is simply to compare prices to incomes and rents. Here, from Calculated Risk, are two charts that show how absurdly inflated house prices got during the bubble--and how, even today, house prices are still above their long term averages.
So house prices are far from the "cheapest in 40 years." In fact, they're still above average.
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