FSD, I posted because I disagree. Housing is only cheap because of unrealistic financing. Housing will be fairly priced when we return to historic norms for ALL the important aspects of how housing is priced, including incomes AND interest rates. Its only cheap if you ignore risk. Risk is NOT intangible. Unemployment is high and probably going higher. Interest rates are driven to lows only because our govt is buying all the mortgages and subsidizing risk at a huge level. Costs for everything basic are surging MUCH faster than increases in income. Its nuts to say housing is affordable.
I’ve had this argument with Rich several times over dinner. I suppose the way I view it is that in order for housing to recover it has to be fairly priced. In order for fairly priced to occur, employment must be on the rebound or at least stable. Lenders must also be accurately compensated for the risk of lending money. One other often overlooked issue is rising taxation. Too many of the unspoken assumptions in this and many other threads are that none of the fundamentals have changed radically. If nothing else this period of instability should point out that many of those either no longer are true, or are due to be changed in the near future.
If you just look at the statistics of rent to own in aggregate I’d agree that things aren’t awful. Of course, again you are making assumptions that the rest of the “market” is functioning normally as well. One of those assumptions is that rent to own ratios encompass a very broad swath of society. In the US where unemployment hovers near 10% I don’t think that’s a valid claim. If unemployment were close to average sure. So now there are two problems I have with that metric. One it covers a much smaller group of people than it used to. Second there is no compensatory stat for those who aren’t covered and probably aren’t working. That’s just one of the traditional metrics that people use. There are of course others.
