Are home prices really less expensive? Some think not.

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For sale signAt first look, it would seem pretty hard to argue that home prices are far less expensive today than they were a few short years ago. Just about anywhere in the U.S. you look, you are likely to find home prices way down from a year ago with little sign of any robust recovery anytime soon.

So, how is it that some real estate experts are actually arguing that buying a home today is actually more expensive?

The key, says one prominent blogpost, mybudget360.com, is asking not whether homes are less expensive (they are) but whether "prices are affordable?" And, as you may have quickly guessed, these folks believe the answer to that important question is a resounding, "no!"

"There seems to be this implicit belief that because prices have fallen so drastically," says the blog, "that they somehow must reflect a bargain. This is not necessarily true."

What the mybudget360 folks, and some others, are getting at is simply that one must examine the income of the average American to determine whether the ratio between that income and home prices actually represents a true "bargain."

One recent study shows the percentage of homeowners who are now spending 50% or more of their yearly income on housing is rising.

Of course, we already know that the unemployment rate nationally is historically high, as is the feelings of job insecurity for those Americans who still have one.

By most recent estimates, the average American wage earner has actually lost purchasing power over the past several years.

When you factor all this together, the conclusion is that homes are actually still very expensive, no matter what banks and some other lending institutions might be telling us!

And, "fixing" this problem is...well...a problem itself. Formulas used by some banks and other lending institutions to help homebuyers determine whether they can afford a particular home are nothing more than snapshots of the person's current and expected economic condition. They can't really take into account what I like to call "life's little bumps" which often are not so little: rising utility bills; car insurance payments; tuition; an unexpected child; loss of income etc.

In other words, the best you can do is try and plan for the future while being honest with yourself and recognizing that, by its very definition, the future is not really all that predictable.

Charles Feldman is a journalist, media consultant and co-author of the book, "No Time To Think-The Menace of Media Speed and the 24-hour News Cycle."

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