U.S Housing Historic Undervaluation - Will Housing Finally Take Off?
According to analysts at Capital Economics, due to the continued depreciation of residential property values at the end of 2010, housing is more undervalued than ever before. Based on Case-Shiller housing index the 4th Q of 2010, housing was 21% undervalued as compared with disposable income per capita and 15% undervalued as measured against disposable income according the FHFA.
Lower prices + low interest rtes = lower monthly mortgage payments. On median priced housing purchased with a 20% down payment, is at record lows of 13% of median income - according to Capital Economics.
The recent de-valuing of housing stock seems to be attracting cash investors - and according to Capital Economics, are driving 70% of the increase in existing home sales since last July, whereas first time home buyers account for just 6% of the increase in sales of existing homes....Man up - it's time to buy.