Headlines regarding troubles in the housing market are common and would lend us to believe that prices are beyond the reach
of average wage earners. While this can be true in some of the higher priced Metropolitan areas, overall, the cost of owning
is now less expensive than it's been at any time since 1963.
Are Today’s Prices Affordable?
Percentage of Individual Income to Finance a Median Priced Home
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
1964
1963
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
40.5% Avg.
23% Current
R
Steve Carrigan, CMPS CLA
Carrigan Financial Group
Platinum Home Mortgage
805-389-0282 ext 206
FAX 805-389-0292
www.AskSteveCarrigan.com
Home Economics 2009
This graph shows the principal and interest payment on a median priced home (20% down, prevailing 30Yr. fixed rate loan)
as a percentage of individual income for each year from 1963 through the beginning of 2009.
As interest rates rose in the 70's, so too did the cost of a monthly loan payment. As rates declined from that peak in 1981,
payments came back in line and declined to the previous low point in 2002. Today, we have reached a new low cost of
ownership and are far below the historical average.
While many are concerned about the economy, for those that are secure in their employment, now may prove to be one of
the best opportunities our markets have provided not only in the past, but for a long time to come.