Cheap Mortgages Are Hiding the Truth About Home Prices

Zillow's chief economist says the U.S. housing market is "in a carnival funhouse mirror" when it comes to affordability. Illustration by 731; Photograph by David Sucsy/Getty Images

At first blush, home buying looks quite affordable right now. New data from real estate website Zillow show that if a person earning the median income of $52,513 buys a home at the median price of $157,400, he would spend just 12.6 percent of his income on mortgage payments. That’s more than one-third less than the prebubble averages, when a mortgage on a median-priced home would cost about 20 percent of a median income.

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