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What an odd OpEd in Tuesday's NYT.

Its value is the accompanying chart (below) but the rest of it is, how can I politely phrase this? Merde.

courtesy of NYT

I find all the happy talk in the accompanying article nonsense.

Why? Three simple reasons:

1. Excess housing inventory is currently at or near historic levels.

2. The Housing Affordability Index is still very elevated (the index measures median household income relative to the income needed to purchase a median-priced house). While it is off of its recent highs, it is still above its historic mean by significant amounts.

3. The House Price to Rental Ratio. As the nearby chart shows, we are not remotely close to normalized levels yet.

Ratio of OFHEO house price index to personal consumption expenditures on rent

Chart courtesy of WSJ

Also check out: Beware the housing bottom-callers

Home Sweet Investment
NYT, March 18, 2008