One more dimension to this affordability issue is that the borrower’s willingness to pay a certain amount of their paycheck towards housing is not the same as their maximum ability to pay that amount. We’ve recently seen examples of people being willing to pay (or at least, commit to paying) more than they can afford to pay; but we haven’t seen as much in the way of borrowers being unwilling to max out their paychecks on housing.
I think that unwillingness is not only possible but even probable at some point. We saw it back in the mid-90s – mortgage payments (PITI) as cheap as rents. Could it happen again? Maybe.
