Bargain Housing Prices – Should I buy my first home?
The substantial drop in home prices over the last few years has caused some young professionals to begin exploring the real estate market, looking for a once in a lifetime opportunity to buy their first home. With prices falling over 20% in numerous cities across the country, it is not out of the ordinary to find homes listed for over $100,000 less than their peak price. On the surface these houses can seem downright cheap, but we must remember that cheap is a relative term and these properties only appear cheap relative to their once hyper-inflated valuations.
There was a good article in the WSJ that makes the case that home prices are still too high and have not fallen completely back to normal levels. Take a look at the graph below which compares housing prices relative to average incomes. Using this ratio as a metric it is easy to see that while we have come a long way from the top of the bubble, housing prices are still not a bargain when looking at historical trends.
If you live in Chicago and are interested in learning more about first time home buying then go here.
