A new study says that housing prices in the U.S. have finally gone back to a level of affordability that we haven’t seen since before the rapid price inflation of the mid-2000s housing boom.

In the 15 years leading up to the beginning of the last housing bubble in 2003, the ratio of home prices to annual income averaged around 1.9:1. At the height of the bubble, that ratio peaked at 2.3:1.

The most recent numbers from September 2010 put that number at 1.6:1. While this truly sucks for those people who purchased a house at the height of the boom, it’s good news for those renters who can afford a mortgage and are thinking about becoming homeowners.

“Based on incomes, this is as affordable as it gets,” said Mark Zandi, chief economist at Moody’s Analytics, the people behind the study. “If you can get a loan, these are pretty good times to buy.”

Home prices are now undervalued in several markets and experts believe that the markets hit hardest by the bursting of the bubble — Las Vegas, Atlanta, Detroit, Phoenix — still haven’t seen prices bottom out yet.

“It’s become cheaper to buy than to rent [in Phoenix]” an Arizona real-estate investor tells the Wall Street Journal. “But the question is: can you qualify for a loan?”

And then there are those markets, including New York City and Seattle, where the analysts say home prices remain overvalued.

According to WSJ, economists and housing analysts anticipate another 5% to 10% decline in prices before they reach bottom later this year or early next year.

Home Affordability Returns to Pre-Bubble Levels [WSJ]

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