Re:Show HN: Is the stock market going to crash?
by deafcalculus on Monday August 07, 2017 @01:13PM
(#14949147)
Do you think there's another housing bubble now?
[ Parent
| on HN ]
Re:Show HN: Is the stock market going to crash?
by Animats on Monday August 07, 2017 @06:52PM
(#14951943)
To answer that, look at the ratio between median house price and median income. Historically, that's around 2.2. Freddy Mac says 3.5 is the new normal. It got up to around 4.7 before the 2008 crash, and peaked around 10 for California.
This is a measure of whether people can make their mortgage payments. When that ratio gets too high, foreclosures rise.
The Economist has an interactive chart, but, annoyingly, they don't let you see the absolute ratio number, just its trend.[2]
[1] http://www.freddiemac.com/research/insight/20160531_how_to_w... [2] https://www.economist.com/blogs/graphicdetail/2016/08/daily-...