Twohistorical guides offer clues. First, theres ultimately always arelationship between incomes and home pricesthe latter can only riseso far above income-based affordability before an inevitable adjustmentprocess kicks in. Unlike Internet stocks, most houses are usefulpeoplewith incomes buy them to live in. So over the long haul, homes must bepriced at levels buyers can afford. Julys median house price was$204,000. Assuming a 6.4% mortgage rate, that works out to an initialafter-tax monthly payment of $795, or 20.7% of after-tax income, whichhistorically is [...]
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[Source: The Money Blogs]
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