Housing costs: Cheapest in 40 years

Northern Trust economist Paul Kasriel raised some eyebrows after declaring in a recent report that "housing is about as an attractive a purchase as it has been in the past 40 years."

Kasriel, who is no Pollyanna, based his analysis on a combination of "rock-bottom" mortgage rates, house prices relative to household incomes, and a classic comparison of ‘buying vs. renting'.

There's no debating housing affordability has improved dramatically as mortgage rates have fallen and home prices tumbled from the 2006 highs. But Dan Alpert, managing director of Westwood Capital, says would-be buyers need not worry about the market ‘running away' from them, as many Americans feared earlier this decade.

"The affordability is pretty much here to stay," Alpert says. "I think we're going to be in an era of very flat pricing and very, very cheap money for a very long time."

If it's not clear, that's not a ‘good news' outlook, he says: "In a deflationary environment, you have to scratch your head twice and say, ‘Gee, do I really want to be owning rather-than renting?'"

Overall, Alpert predicts national home prices to fall another 5% to 8% from the lows of May 2009 but expects real estate trends to become much more regional, i.e. return to more historic norms.

On that front, he sees more risks in areas that fared best during the downturn, like the New York metropolitan area. In the so-called Sand States, where housing prices fell 45-55%, "housing has reached the point where, relative to rentals, occupancy costs are about the same," he says. "That's not the case here in NY and elsewhere on the East Coast."