So, we do a lot of talking on this site about “The Fundamentals.” For example, “The downturn won’t be complete until we get back to fundamental levels.”
I think we all understand that term to mean something like: the set of economic conditions that will sustain long-term home affordability for residents.
My question is – what are “the fundamentals?” How are they calculated? What are the metrics to track and how do we know when we get there? What are the actual equations that define them mathematically?
The information you are seeking can be found in the Bubble Primer at the top of the front page of this blog. Read through those and that should answer most of your questions.
The information you are seeking can be found in the Bubble Primer at the top of the front page of this blog. Read through those and that should answer most of your questions.
The monthly cost of purchasing a home using conventional financing (20% down, fixed rate 30 year mortgage) should be roughly equivalent to (or slightly less than) the rent for a comparable property, after adjusting for tax deductions and maintenance expenses. This was the rule for home purchases for a long time and has only recently fallen out of fashion. Most of us here believe that this criteria will again become the norm in the near future — if it doesn’t we will happily rent properties since it’s cheaper.
Basically if you understand junior high arithmetic, “the fundamentals” are easy to figure out. Of course that rules out about 90% of the US population.
The monthly cost of purchasing a home using conventional financing (20% down, fixed rate 30 year mortgage) should be roughly equivalent to (or slightly less than) the rent for a comparable property, after adjusting for tax deductions and maintenance expenses. This was the rule for home purchases for a long time and has only recently fallen out of fashion. Most of us here believe that this criteria will again become the norm in the near future — if it doesn’t we will happily rent properties since it’s cheaper.
Basically if you understand junior high arithmetic, “the fundamentals” are easy to figure out. Of course that rules out about 90% of the US population.
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