Malkiel

Foreclosures Have Peaked and It's Time To Buy? Not So Fast

I'm really surprised that so few people are noticing the flaw in picking the bottom of the market when it comes to housing--if you're in the market for a house, the bottom of the market has come when the house you want to buy (all other things being equal, like house is sound and well appointed and not over/under sized for neighborhood) is between 2.5 and 4 times your gross annual income. Any house within that range has reverted to the mean of affordability and is no longer a "bubble" property. It doesn't really matter whether that house loses a little more valued during the downturn because it will probably recover it later, since it isn't drastically overpriced to begin with; and if your income is a great deal more than the median, and you've bought a property more expensive than the median but still within your own income range, it still isn't a "bubble" property, it's just a premium property that will take longer to sell later. The buyer's own income is the yardstick they should be using to make their decision, not some bottom-feeding philosophy about the market as a whole...