Home Payments as % of Median Income

[Chris Seveney]

I saw this online the other day. Its percent of home payment to median income which has been skyrocketing over the past few years. I had mentioned in the past 1 of 2 things is going to happen:

1. This goes back to the norm level or comes down. There are 3 ways this can happen

a) Salaries increase (unlikely)

b) Interest rates drop (not very likely since we I believe we have $8T of debt to sell next year that is coming off books and China and Russia are not buying US dollar as much

c) Home prices drop

2. Status quo and anyone born after 2008 will not be buying a home until they are in their 40's if they are lucky and we will have a generation of renters or kids whose parents passed down a lot of $ to them.

Which one do you think will happen? Personally I am thinking 1c.