U.S. Home Prices Fall to Pre-Bubble Levels

Before you go, we thought you'd like these...
Before you go close icon
U.S. Home Prices Fall to Pre-Bubble Levels The drop in home values caused by the mortgage crisis has resulted in at least one positive outcome: Prices have fallen so far and so fast that home affordability is back to pre-housing boom levels, according to a new report.

After reaching a peak in late 2005, the ratio of home prices to annual income fell to its lowest levels in 35 years last September, according to data compiled by Moody's Analytics, which tracked median home prices and annual incomes in 74 markets.

Search Millions of Home Listings
View photos of homes for sale and apartments for rent on AOL Real Estate
By that measure, housing affordability at the end of September had returned to or surpassed the average reached between 1989-2003 in 47 of those markets, The Wall Street Journal reported, noting that most economists believe the housing boom took off in 2003.

Sponsored Links
"Based on incomes, this is as affordable as it gets," said Mark Zandi, chief economist at Moody's Analytics. "If you can get a loan, these are pretty good times to buy."

Though homes have become affordable, an increasing number of people who bought as the market was rising toward its peak are finding that their homes are now worth less than the amount owed on them, also known as being "underwater."

More than a quarter of households with a mortgage were underwater at the end of December, up from 23% in the third quarter, the Journal reported, citing data compiled by real estate website Zillow.com. The increase was attributable to a further decline in home prices and the temporary cessation of foreclosures by banks, which had halted the practice to correct errors in document handling.
Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners