I completely agree, measuring price to predict price is a notorious mistake in the world I live in. It is clear to me that the interest only calc for mortgages needs to be substituted for the 30 yr P+I as the base affordability measure. These loans have been around for a very long time, and are not going away, so figuring payments based on those I think has more merit. So maybe 20% down and then Interest only on the 80% etc.. The 100% financing I am not too sure about longevity wise. This also needs to be used in the rent to own ratios in my opinion.
Ratios like you speak of have been written about, even by that pathological liar, Lereah. I do not know what the best ratio would be, but I think research in that area is prudent. I do not have time to do it. I read an article recently about a gal who created her own P/E types of ratios and used them to buy and sell homes successfully. There are some great researchers in here, so maybe somebody can take this one on.
