Home Affordability Hits 40-Year High, Report Says

Lending standards may be rigid and home prices tottering, but the silver lining of the housing bust continues to twinkle at homebuyers. Homes are now more affordable than they've been in 40 years, reports the Housing Predictor news site.

The U.S. Department of Housing and Urban Development has just affirmed that Americans definitely have a buyer's market on their hands. Not since 1971, HUD said in a recent press release, have prices been so affordable.

Still reeling from the bursting of the housing bubble in 2007, market prices have fallen to 2003 levels, according to Zillow. And as if that wasn't enough to entice buyers, borrowers are being dangled yet another incentive: Mortgage rates are at historic lows. The average rate of a 30-year-fixed mortgage dropped to 3.91 percent last week, matching the lowest on record.

But as much as one might expect these conditions to lead Americans to snatch up properties, impediments continue to stifle the market. Banks are now as conservative with their lending standards as they were once liberal. And they were really, really liberal. What's more, the bottom still isn't in sight in all markets.

On the bright side, recent data suggests that a recovery may be kicking into gear, albeit a low one. Pending home sales hit a year-and-a-half high in November, while total home sales reached a 10-month high, according to the National Association of Realtors. If you've got the credit and the cash, it could be an ideal time to buy.

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