I have been wanting to discuss a horrifically misleading article for a week now: Americans Shun Cheapest Homes in 40 Years as Ownership Fades.
It is an object lesson in how an industry spokesgroup, engaging in biased analysis, used poor econometric models to create misleading data. That led to others making bad assumptions based on that data, which in turn leads to an unsupported conclusions. To wit, that home prices are now cheap (they are not) and home ownership is being shunned (it is not). Thus, the end result is a misleading Bloomberg.com article on residential Real Estate that is unfortunately based on these terribly flawed NAR metrics.
The reality is quite different than the spin. No, it is not, as objective data reveals, especially cheap.
from the headline, I thought the author was going to show US property was expensive…..but, no….. on his nos, it is slightly more expensive, relative to income, than historical averages……. that is bad news? With historically low interest rates and the ratio to income being near historical averages, perhaps it is possible to be positive…… what the US does need to do is change the laws which created ‘subprime’ and get rid of non-recourse loans…. borrowers should have to prove their income and lenders should not be able to lend without having proof people can afford to borrow the money….. but there is no need to be gloomy about US housing being around long-term levels of affordability relative to income (and is ‘indefendable’ a word….. think there is a much more elegant word already in existence….. )