Question: “Should we be concerned that home prices are rising faster than family income?”
Answer: “No. There are three components to housing affordability: home prices, income, and financing costs – the latter are historically low.”
I am not an economist, nor do I play one on TV, but this argument seems … precarious. What happens in three (or two) years when those who have unwisely chosen 3 year interest only loans see those 4.5% mortgages jump to 6.5%, or 8.5%? Will they have planned judiciously for that event … or not?