The Big "R" Word

Bank of America does extensive market research regarding home affordability which they publish every quarter.

The latest statistics are for the 2nd quarter of 2006.  They estimate that home affordability is more stretched right now than at any time since 1990.  For the 2nd quarter of '06 they show the mortgage payment on the median priced home required 23.6% of median household income.  That is 4% higher than the average from 1991 thorugh 2005.

By their estimate, mortgage rates would need to fall by almost 2% or the median home price would need to fall by almost 19% to restore affordability to the average level seen from 1991 through 2005.  19% reduction in prices equates to a 1/5 reduction in value. 

To us that type of reduction would indicate a Recession....Let's hope it doesn't come to that.

1:35 PM - Sep. 25, 2006 - comments {0} - post comment

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