The chart above shows another measure of housing affordability over time by displaying the monthly mortgage payments (adjusted for inflation) for a median-priced new home (Census data here) financed at the prevailing 30-year mortgage rate in each month back to January 1978, assuming a 20% down payment. Payments today for a $212,300 median-price new home purchased in October with a 20% down payment and a 4.07% fixed-rate 30-year mortgage would be $817.71, the lowest in the history of this series back to 1978. It's only been since 2009 that payments have remained mostly below $1,000 per month, and the October payment is about 38% below the average of $1,375 per month over the last 33 years.
The incredible housing affordability today, at least for middle-income, first-time home buyers, seems to be an under-reported and under-appreciated story. As I reported previously, I'm suggesting that the incredible affordability of housing has to counteract and offset some of the "gloom and doom" about younger generations being worse off than their parents, stagnating income, increasing income inequality, the necessity of a dual-earner household to survive financially and the dangers of inflation. . . .