Real Estate Trends
The Average Payment to Income chart reflects the average payment relative to the income of the average person.
This is probably the single most important ratio to watch in the real estate market. Affordability drives prices. The chart is more representative of the market because it uses monthly payment as the numerator rather than house prices. It reflects more of how the average person purchases a house.
Full dataset to calculate this ratio available here. Linear regression is used to estimate historical sales prices as well as income.
This chart shows the difference of the 100-day moving average and the National Payment to Income Ratio. This dataset should be stationary. The high vales indicate bad times to buy and low values indicate good times to buy.
The Average Price to Income chart reflects the average house price relative to the income of the average person.
This is probably the second most important ratios to watch in the real estate market. The difference in this chart and the previous one is would indicate if a house was a good price if you’re paying cash.
Full dataset to calculate this ratio available here.
This chart shows the difference of the 100-day moving average and the National Price to Income Ratio. This dataset should be stationary. The high vales indicate bad times to buy and low values indicate good times to buy.
While not a perfect indicator this shows the activity of mortgage applications. A low volume of mortgage applications means people aren’t buying houses.
source: tradingeconomics.com
Inventory to Population
This chart indicates if housing prices are overvalued or undervalued based on mortgage rates. It’s not intended to be perfect. However, when these lines diverge it means that either mortgage rates need to fall or housing prices need to fall. House prices on this chart are inverted.
Rental index
Housing Inventory – The higher this goes the more options for buyers. Prices will come down. The lower it goes prices will go up due to low inventory.
The affordability of houses is essential. This chart oscillates up and down. When it’s high it’s a bad time to buy and a good time to sell. The inverse is also true.
Mortgages can only outrun income for so long.
This chart tells you if 30-year mortgage rates are high relative to 10-year treasuries. This is a short-term indicator. If it’s high don’t get a mortgage. Wait for it to oscillate back down. These are highly correlated so they should revert to the mean.
As indicated above these two are highly correlated.
