{"id":103454,"date":"2015-11-23T08:48:55","date_gmt":"2015-11-23T16:48:55","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=103454"},"modified":"2015-11-24T09:13:39","modified_gmt":"2015-11-24T17:13:39","slug":"low-interest-rates-barely-keep-affordability-reasonable","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2015\/11\/23\/low-interest-rates-barely-keep-affordability-reasonable\/","title":{"rendered":"Low Interest Rates Barely Keep Affordability Reasonable"},"content":{"rendered":"

You can get access to the spreadsheets used to make the charts in this and other posts by becoming a member of Seattle Bubble<\/a>.<\/em><\/p>\n

Let’s have an updated look at our affordability index charts for the counties around Puget Sound.<\/p>\n

As of October, affordability is still bad, but not terrible for home buyers. Median home prices have dipped just slightly in the last few months (as is typical for this time of year), while interest rates continue to hover at absurdly low levels. The affordability index for King County currently sits at 103.1. An index level above 100 indicates that the monthly payment on a median-priced home costs less than 30% of the median household income.<\/p>\n

\"King<\/a><\/p>\n

I’ve marked where affordability would be if interest rates were at a slightly more sane level of 6 percent—80.2, which is worse than any point outside of 2006 through mid-2008. We’re still in the unusual situation where “normal” interest rates would put the current market into extreme bubble territory.<\/p>\n

Here’s a look at the index for Snohomish County and Pierce County since 2000:<\/p>\n

\"Snohomish<\/a><\/p>\n

Similar movement in Snohomish and Pierce to what we’re seeing in King County, but with higher affordability numbers. The affordability index in Snohomish currently sits at 126.3, while Pierce County is at 162.4.<\/p>\n

Tomorrow I will post updated versions of my charts of the “affordable” home price and income required to afford the median-priced home. Hit the jump for the affordability index methodology, as well as a bonus chart of the affordability index in the outlying Puget Sound counties.<\/p>\n

<\/p>\n

\"Outer<\/a><\/p>\n

As a reminder, the affordability index is based on three factors: median single-family home price as reported by the NWMLS<\/a>, 30-year monthly mortgage rates as reported by the Federal Reserve<\/a>, and estimated median household income as reported by the Washington State Office of Financial Management<\/a>.<\/p>\n

The historic standard for “affordable” housing is that monthly costs do not exceed 30% of one’s income. Therefore, the formula for the affordability index is as follows:<\/p>\n

\"Affordability<\/a><\/div>\n

For a more detailed examination of what the affordability index is and what it isn’t, I invite you to read this 2009 post<\/a>. Or, to calculate your the affordability of your own specific income and home price scenario, check out my Affordability Calculator<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Let’s have an updated look at our affordability index charts for the counties around Puget Sound.<\/p>\n

As of October, affordability is still bad, but not terrible for home buyers. Median home prices have dipped just slightly in the last few months…<\/p>\n","protected":false},"author":2,"featured_media":103458,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"On the blog: Low Interest Rates Barely Keep Affordability Reasonable","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[8,616],"tags":[28,704,61,223],"coauthors":[],"class_list":["post-103454","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stats","category-counties","tag-affordability","tag-big-picture","tag-fundamentals","tag-interest-rates"],"yoast_head":"\nLow Interest Rates Barely Keep Affordability Reasonable \u2022 Seattle Bubble<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/seattlebubble.com\/blog\/2015\/11\/23\/low-interest-rates-barely-keep-affordability-reasonable\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Low Interest Rates Barely Keep Affordability Reasonable \u2022 Seattle Bubble\" \/>\n<meta name=\"twitter:description\" content=\"Let's have an updated look at our affordability index charts for the counties around Puget Sound. 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