[lssndrdn]

Accoring to this article, the income/home price ratio has gone

  1950 -> 2.21

  1960 -> 2.11

  1975 -> 3.15

  2008 -> 4.40

With housing bubble and all, it seems that this is part of a long-term trend. Choosing 1975 as the hypothetical standard of where the ratio might return seems completely arbitrary.

[jcromartie]

> Choosing 1975 as the hypothetical standard of where the ratio might return seems completely arbitrary.

My guess is that it's based on the notion that wages (for the average person, not for the rich) have been stagnant since about that time.

[ubernostrum]

Anecdotally, the standard advice I've always heard is that you should look for a house priced at around 3x your annual salary, and that you should be able to make a 20% down payment. If it's not possible to find a reasonable house which fits that, then there's a problem somewhere.