Monday, October 16, 2017

A housing teaser

 - by New Deal democrat

Here is something I have been working on for the last month.  As it happens, last week Kevin Drum posted some aspects of the same data.

House prices have exceeded by a substantial margin median household income:

But the monthly mortgage payments have not:

This is because, while the prices of houses have increased, mortgage interest rates have decreased over the same period.

So, saving for the down payment is considerably more difficult (unless, e.g., parents are helping out), but once the house is bought, the monthly carrying cost for living in the house really hasn't gone up at all.

 What's missing in this discussion is comparing both household income and mortgage payments to the alternative (leaving aside living in mom and dad's house) of paying rent.

I still have some number crunching to do, but once the three way comparison is finished, it will be a really illuminating look into how much the alternatives for shelter really cost.  Stay tuned.