Affordability has improved, but the correction is far from over

This morning’s Daily Telegraph reported that, according to Lombard Street Research, housing affordability is now better than its long-term average. That much is uncontroversial. However, we disagree with their conclusion that the housing slump will be over by Christmas. Other valuation metrics, the dire economic outlook, as well as the experience of the 1990s, all lead us to believe that the correction will go on until late 2010.