A history lesson

Dean Foust

Another interesting report out today from Merrill Lynch's crack economics team. North American economist David Rosenberg notes that thanks to the ongoing runup in housing prices, the affordability ratio for first-time buyers has deteriorated to levels last seen in the third quarter of 1989. Yes, interest rates are still low by historical stands, but prices for starter homes (which are up 14% in past year, notes Rosenberg) have outstripped first-time buyer incomes (up 4%) by an
unprecedented pace. And here's where Rosenberg offers a history lesson, reminding up what happened in the third quarter of 1989...

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