I like the way economist Dr. Irwin Kellner explains housing, because he's sensible and straightforward. He says in his latest column for MarketWatch that housing could turn around quickly because it's become affordable again.

"I don't care about the cost of land, labor, building materials or the house next door," he says. "What matters to me is the ratio of home prices to household income."

Dr. Kellner points out that as of April, home sales statistics suggest that the median existing home costs 3.4 times household incomes, while median new-home prices are about 3.8 times family incomes.

To put these numbers in perspective, Dr. Kellner says that home prices are down from 4.2 times household incomes in 2005, although they "remain above the 2.8 figure that prevailed in the 1980s, when housing sold at a brisk pace."

"But home prices don't have to get down to 2.8 times incomes to kick-start the market," he says. "A bit over three times might do it."

According to the National Association of Realtors, the national median existing-home price for all housing types was $202,300 in April. Prices have dropped 8.0 percent below a year ago when the median was $219,900.

If you use Dr. Kellner's ratios, it would take an income of $59,500 to buy the median home priced at 3.4 times earnings.

Dr. Kellner's stats matter because lending standards have returned to the 1980s. Gone are the alternative loans which allowed people to get into homes with nothing down and teaser rates. Also, income to debt ratios are much more conservative.

Buyers can count on safely qualifying for a home if they have good credit, put 20 percent down and buy a house with no more than 25 percent of their gross income. By that standard, a family with an income of $45,296 can buy a median priced home, according to a NAR series.

The NAR says that the median income for first-time homebuyers is $58,600, and for repeat buyers, it's $85,700. No wonder housing is looking more affordable.

Published: June 5, 2008

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.