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Lawrence Yun, Chief Economist for the National Association of Realtors wrote the following column about our very low current interest rates, and therefore very low mortgage payments, on October 6th.    I wish to share his column with you: 

A home buyer purchasing a typical American home at the prevailing average mortgage rate  today would have a mortgage payment of  $698 a month. This figure is not much different from what a home buyer would have faced 30 years ago. In 1981, home prices were much lower but mortgage rates were reaching 18 percent. Today, home prices have come down by about 33 percent on average from the bubble years, but prices still remain comfortably higher than those of the 1980s. However, thanks to record low mortgage rates, the monthly payment obligations have been greatly reduced.

Compare the chart below on the 30 year payment growth of the overall consumer price index,  rent, food prices, gasoline prices, college tuition, and medical costs, versus the monthly mortgage payment. The rapid increases in college tuition bills may also imply too much demand, perhaps even a bubble in term of students not getting their money’s worth.  A recent spike  in college student loans is due primarily to weak job market conditions, but may also be due to ‘over investment’ in education in relation to the cost.