In the comments on yesterday’s post, reader “Topdog” posed the following question: So the Fed stops playing funny money, lets interest float to market rate. Lets say a reasonable 3% premium plus the 3% inflation premium which puts high quality new mortgages at about 6%. How does that affect buyer affordability? That’s a question we…
Tag: big-picture
Local Incomes Could Afford 22% More Expensive Homes
Let’s take an updated look at home affordability in King County. First up, the affordability index. The affordability index is based on three factors: median single-family home price as reported by the NWMLS, 30-year monthly mortgage rates as reported by the Federal Reserve, and estimated median household income as reported by the Washington State Office…
Price to Rent Ratio at Early 1998 Levels
It’s been about a quarter of a year since we last checked in on the Seattle-area’s price to rent ratio, so I thought I’d share an update of those charts. As of January (the latest Case-Shiller data available), Seattle’s price to rent ratio is down to just 2.5% above the 1990-2001 average, hitting its lowest…
Big Picture 2011: Unemployment and Foreclosures
To close out the week, let’s take an updated look at a couple of factors that are continuing to drag the local housing market down: unemployment and foreclosures. From 1990 through 2006, the average unemployment rate in King County was 4.9%. The unemployment rate is currently 7.9% (61% higher than the 1990-2006 average). Over that…
Big Picture 2011: Price to Income Ratio
Okay, let’s have a look at how local home prices compare to local incomes. This is basically the same thing we’re looking at when we talk about affordability, but with interest rates taken completely out of the picture. First, let’s check out the ratio between home prices and King County median household income data from…