{"id":26555,"date":"2013-05-23T11:09:33","date_gmt":"2013-05-23T18:09:33","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=26555"},"modified":"2013-05-23T11:17:58","modified_gmt":"2013-05-23T18:17:58","slug":"home-affordability-tanking-in-2013","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2013\/05\/23\/home-affordability-tanking-in-2013\/","title":{"rendered":"Home Affordability Tanking in 2013"},"content":{"rendered":"

It has been over four months<\/a> since we had a look at the local affordability index, So let’s have a look at what the numbers look like with the price increases we’ve seen so far this year through April.<\/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

So how does affordability look as of April? Good, but definitely not great:<\/p>\n

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

I’ve marked where affordability would be if interest rates were at a more sane level of 6%. An affordability index of 89.0 is slightly above where the index was in August 2005 when I first started Seattle Bubble (rates were 5.82% at the time). We’re definitely on an unsustainable trajectory right now, and the affordability index is only good thanks to still-crazy-low interest rates. Hopefully prices will level off before things get really<\/em> out of hand.<\/p>\n

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

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

Similar situation, but things haven’t taken quite as steep a plunge over the last few months.<\/p>\n

Tomorrow I’ll post updated versions of my charts of the “affordable” home price and income required to afford the median-priced home.<\/p>\n","protected":false},"excerpt":{"rendered":"

It has been over four months since we had a look at the local affordability index, So let’s have a look at what the numbers look like with the price increases we’ve seen so far this year through April. 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