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The cost of a house has spiked to over 7x median income in the US, in a very short time. That's put buying a house out of reach for many people. Hopefully the b

The cost of a house has spiked to over 7x median income in the US, in a very short time. That's put buying a house out of reach for many people. Hopefully the bubble will burst -- but who knows? It could drag on for a very long time. Historically, the cost of a house has hovered around 4.5 to 5.5x annual median income. It's currently at the highest level it's ever been, at least according to this graph: https://www.longtermtrends.net/home-price-median-annual-income-ratio/#:~:text=Historically%2C%20an%20average%20house%20in%20the%20U.S.%20cost,7%20times%20the%20U.S.%20median%20annual%20household%20income https://www.longtermtrends.net/home-price-median-annual-inco....

gruez 5y ago
What about factoring in interest rates? After all, people ultimately care about the monthly payments than about the sticker price.
- nly 5y ago
  For those in the US who generally fix their mortgages for full-term (25-30 years), this will definitely be offering some relief. In places like the UK we have the same phenomenon but most people are on 2-5 year fixed rates.
heavyset_go 5y ago
> Hopefully the bubble will burst -- but who knows? It could drag on for a very long time. The median home price in Canada is $800k and rising, while in the US it is $400k and rising. Housing prices in the US could easily double.
- ac29 5y ago
  > in the US it is $400k and rising Actually the latest quarter median prices fell in the US, which may continue as interest rates increase. Broadly speaking though, prices certainly are up over the last couple years. https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS
jjav 5y ago
House price to income ratio doesn't tell the whole story because that doesn't include cost of mortgage. A more informative value to compare would be monthly payment to income ratio. For example, when I bought my first home the price was around 4.5x my income. But the interest rate on that first mortgage was 8.25%

gruez 5y ago

What about factoring in interest rates? After all, people ultimately care about the monthly payments than about the sticker price.

nly 5y ago
For those in the US who generally fix their mortgages for full-term (25-30 years), this will definitely be offering some relief. In places like the UK we have the same phenomenon but most people are on 2-5 year fixed rates.

heavyset_go 5y ago

> Hopefully the bubble will burst -- but who knows? It could drag on for a very long time. The median home price in Canada is $800k and rising, while in the US it is $400k and rising. Housing prices in the US could easily double.

ac29 5y ago
> in the US it is $400k and rising Actually the latest quarter median prices fell in the US, which may continue as interest rates increase. Broadly speaking though, prices certainly are up over the last couple years. https://fred.stlouisfed.org/series/MSPUS https://fred.stlouisfed.org/series/MSPUS

jjav 5y ago

House price to income ratio doesn't tell the whole story because that doesn't include cost of mortgage. A more informative value to compare would be monthly payment to income ratio. For example, when I bought my first home the price was around 4.5x my income. But the interest rate on that first mortgage was 8.25%