I got the maps from

[jpinpb]

I got the maps from seekingalpha.

Someone made this comment. I’m posting it here also b/c it just makes sense:

One LARGE thing your historic price to income graph is missing is interest rates. Here are the average interest rates over the period:

2007 6.3
2006 6.4
2005 5.9
2004 5.8
2003 5.8
2002 6.5
2001 7.0
2000 8.0
1999 7.5
1998 7.0
1997 7.6
1996 7.8
1995 7.9
1994 8.3
1993 7.3
1992 8.4
1991 9.3
1990 10.1
1989 10.3
1988 10.3
1987 10.2
1986 10.2
1985 12.4
1984 13.9
1983 13.2
1982 16
1981 16.6
1980 13.7
1979 11.2
1978 9.6
1977 8.9
1976 8.9
1975 9.1
1974 9.2
1973 8.0
1972 7.4

See those nice low points on your graph? A $100,000 at 6% has a payment of $600 a month. The same loan at 13.8 % in the 1980’s? The payment at 13.8% is $1200 or so. At “just” 9% like in 1991 the payment is $800 or 25% more.

So, if you normalize your graph with respect to HOUSE PAYMENTS, not HOUSE PRICES, you will get a MUCH different graph. One that is more appropriate when calculating affordability of housing.