|Posted: 24 Mar 2016 KCM CrewTwo weeks ago, we posted a blog which explained that current increases in home prices were the result of the well-known concept of supply & demand and should not lead to conversations of a new housing bubble. Today, we want to look at home prices as compared to current incomes. Here is a graph showing the monthly mortgage payment on a median priced home in the U.S. over the last 25 years:Mortgage payments are currently well below the historic average over that time period. Purchasers are not overextending themselves to buy a home like they did on the run-up to the housing crash. Lawrence Yun, the Chief Economist at the National Association of Realtors, recently explained in a Forbes article:
Due to low interest rates, demand for housing has dramatically increased. This has caused a jump in home prices. However, low interest rates have also allowed the monthly cost of buying a home to remain well below historic norms. We are in a strong housing market, not a housing bubble.
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