Comments on: Rent ratios, affordability and cap rates are saying housing is a buy http://www.investmentpostcards.com/2010/04/22/rent-ratios-affordability-and-cap-rates-are-saying-housing-is-a-buy/ Prieur du Plessis’s international investment blog Sun, 29 Jan 2012 22:06:48 +0000 hourly 1 http://wordpress.org/?v=3.1.1 By: John Hansonhttp://www.investmentpostcards.com/2010/04/22/rent-ratios-affordability-and-cap-rates-are-saying-housing-is-a-buy/comment-page-1/#comment-28257 John Hanson Mon, 26 Apr 2010 04:48:34 +0000 http://www.investmentpostcards.com/?p=19560#comment-28257 Houses are still not affordable. Interest rates have been artificially low for more than a decade and this helped increase home prices. Add to this fact that most people's income (except for government workers) have not kept up with the rate of inflation in home prices over the years and I don't see how anyone can say now is the time to buy a home.The government has bailed out home owners over the last couple of years, trying to put a floor under the falling prices. They will eventually run out of other peoples money and then maybe home prices can reach their equilibrium or market clearing price. My guess is that home prices need to fall another 20%. Houses are still not affordable. Interest rates have been artificially low for more than a decade and this helped increase home prices. Add to this fact that most people’s income (except for government workers) have not kept up with the rate of inflation in home prices over the years and I don’t see how anyone can say now is the time to buy a home.

The government has bailed out home owners over the last couple of years, trying to put a floor under the falling prices. They will eventually run out of other peoples money and then maybe home prices can reach their equilibrium or market clearing price. My guess is that home prices need to fall another 20%.

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