Housing Affordability The Highest in More Than 40 Years

With interest rates continuing to decline to new record lows and home prices being down in most places around the country, a new report from Beacon Economics finds that buying a home is more affordable than it has been in roughly two generations.

Using median incomes and home prices, the company said that an average family would only need to spend 16.9 percent of their income on the mortgage payments for an average home. That’s the lowest level since the data used became available in 1969.

With affordability so high, researchers said that soon more buyers would enter the housing market, buying up surplus inventory and helping prices recover from their recent declines.

“While prices may fluctuate modestly over the next several months, we believe the worst of the housing crisis is behind us,” adds Beacon Economics research manager Jordan G. Levine. “We expect prices to stabilize around current levels and likely be higher in the next twelve months.”

That trend of slowly stabilizing prices may already be taking place. According to the National Association of Realtors, median home prices in August were higher than the year before in more than half of the major cities tracked.