Are houses cheap now?

Updated Chief Economist Irwin Kellner sometimes boldly goes where no man has gone before, to cite an old Star Trek phrase, and a current topic is one example: Kellner argues that U.S. home prices are now cheap.

The average home now costs about 2.8 times the average household income – down from four times household income during the housing bubble, Kellner noted. How cheap is a 2.8 multiple? You have to go back to 1986 to find home prices lower relative to median income.

What's more, home mortgage interest rates are much lower today than they were in 1986. In 1986, the effective interest rate averaged a whopping 10.2 percent, Kellner noted, compared to the 4.73 percent average for a 30-year, fixed-rate mortgage today, according to data compiled by the Mortgage Bankers Association.