A Look at Real Housing Prices and Incomes: Some Implications for Housing Affordability and Quality

[...]In this paper, we update this affordability debateusing data from the 1990s. We follow Gyourko and Linneman(1993) in addressing the affordability issue by asking asimple question: Is a home of a given quality from ten ortwenty years ago more or less affordable today to a householdsimilarly situated to the type of household that occupiedthe home a decade or two ago? It is important todetermine whether the prolonged economic expansion ofthe 1990s has significantly improved affordability forhouseholds at the bottom of the income distribution. Real house prices at the lower end of the price distribution fellduring the 1990s. However, our concept of affordabilityalso hinges on the trends in constant-quality house pricesfor which, heretofore, there have not been estimates for thecurrent expansion.[...]