The good news: housing is more affordable now … if you have a job, that is.

According to the WSJ ;

“While the fall in home prices has been painful for current owners, it has also made housing far more affordable for new buyers.”

In fact, the ratio of homes prices to annual income is at its lowest point in 30 years.

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Tidbits

Five years into the housing bust, the U.S. still has 10.9 million “underwater” borrowers, whose homes are worth less than the original purchase price.

* * * * *

If Pres. Obama’s  homeowners refinance gets traction, investors who hold mortgage-backed securities will take a hit when those securities fall in value as borrowers prepay their old loans.  In fact, the MBS market fell out of bed after the White House announcement on Monday.

* * * * *

The Congressional Budget Office tested an economic model of the President’s refinancing plan and estimated that:

  • Government enterprises like Fannie and Freddie would save $3.9 billion from refinancing, but they’d also lose $4.5 billion from the reduced value of their mortgage-backed securities.
  • Pension funds, banks and others would lose as much as $15 billion.

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