It’s easy to get swept up in the rhetoric about falling affordability in the housing market. But while it is true that the affordability index is the lowest it has been in the last decade, don’t forget that we have been riding the wave of the lowest interest rates and highest affordability in history following the housing crash about 10 years ago.
To put it into perspective, a good measure of affordability is to look at the typical mortgage payment required to get a mortgage to buy a median-price home.
The chart below shows typical mortgage payments adjusted for inflation. Although typical mortgage payments are certainly higher than in the ‘fire sale’ days of the crash, they are still lower than they were in the housing boom and the years leading up to it.
