{"id":106004,"date":"2020-09-15T11:00:09","date_gmt":"2020-09-15T18:00:09","guid":{"rendered":"https:\/\/seattlebubble.com\/blog\/?p=106004"},"modified":"2020-09-15T11:58:29","modified_gmt":"2020-09-15T18:58:29","slug":"affordable-home-price-shot-up-33-in-less-than-two-years","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2020\/09\/15\/affordable-home-price-shot-up-33-in-less-than-two-years\/","title":{"rendered":"“Affordable” home price shot up 33% in less than two years"},"content":{"rendered":"

Reminder: Subscribers have access to the members-only spreadsheets folder<\/a>, which is updated with the charts in this post.<\/em><\/p>\n

As promised last week, here’s an updated look at the “affordable home” price chart.<\/p>\n

In this graph I flip the variables in the affordability index calculation around to other sides of the equation to calculate what price home the a family earning the median household income could “afford” to buy at today’s mortgage rates, if they spent 30% of their monthly gross income on their home payment. Don’t forget that this math includes the (giant) assumption that the home buyers are putting 20% down, which would be $148,590 at today’s median price.<\/p>\n

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

The “affordable” home price has shot up from $530,359 in November 2018 to an all-time high of $706,800 as of August. The current “affordable” home price in King County would have a monthly payment of $2,365.<\/p>\n

The current gap of $36,150 between the affordable price and the median price is similar to the difference we saw between the two numbers in mid-2005.<\/p>\n

If interest rates were at a more reasonable level of 6 percent (which is still quite low by historical standards), the “affordable” home price would be just $493,215—more than $200,000 below where it is today, and nearly $250,000 below the current median price.<\/p>\n

Here’s the alternate view on this data, where I flip the numbers around to calculate the household income required to make the median-priced home affordable at today’s mortgage rates, and compare that to actual median household incomes.<\/p>\n

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

As of August, a household would need to earn $99,466 a year to be able to “afford” the median-priced $742,950 home in King County. This is up from the low of $46,450 in February 2012, but down slightly from the May 2018 high of $119,004. The previous cycle high in July 2007 was $99,321. Meanwhile, the actual median household income in King County is estimated to be about $94,500.<\/p>\n

If interest rates were 6% (around the pre-bust level), the income necessary to buy a median-priced home would be $142,540—51 percent above the current median income.<\/p>\n","protected":false},"excerpt":{"rendered":"

The “affordable” home price has shot up from $530,359 in November 2018 to an all-time high of $706,800 as of August. The current “affordable” home price in King County would have a monthly payment of $2,365\u2026<\/p>\n","protected":false},"author":2,"featured_media":106007,"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: \"Affordable\" home price shot up 33% in less than two 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