More ammo for the housing bears here: Despite the dips in both the Case-Shiller and FHFA Home Price Indices, houses still aren’t affordable based on historical price/income ratios.
Historically, both indices have generally tracked Mean Household Income, but as this chart in a new report from St. Louis Fed (.pdf) indicates, as of the middle of this year, there’s still no convergence. And based on the upswing in Case-Shiller numbers over the summer, that’s still the case.
Remove all of the extraordinary government support from the market, and it’s easy to see prices dipping below the lines before they stabilise.
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