{"id":26914,"date":"2013-07-10T10:00:48","date_gmt":"2013-07-10T17:00:48","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=26914"},"modified":"2013-07-10T10:30:42","modified_gmt":"2013-07-10T17:30:42","slug":"interest-rate-and-price-increases-quickly-killing-affordability","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/","title":{"rendered":"Interest Rate &#038; Price Increases Quickly Killing Affordability"},"content":{"rendered":"<p>With the dramatic increase in mortgage interest rates that we&#8217;ve seen over the last few weeks, I thought that it now would be a good time to take another look at what the affordability numbers look like.<\/p>\n<p>As a reminder, the affordability index is based on three factors: median single-family home price <a href=\"http:\/\/www.nwrealestate.com\/nwrpub\/common\/mktg.cfm\" title=\"Northwest Multiple Listing Service: (Consolidated) Statistical Recap\">as reported by the NWMLS<\/a>, 30-year monthly mortgage rates as <a href=\"http:\/\/www.federalreserve.gov\/releases\/h15\/data.htm\" title=\"FRB: Federal Reserve Statistical Release H.15 - Historical Data\">reported by the Federal Reserve<\/a>, and estimated median household income <a href=\"http:\/\/www.ofm.wa.gov\/economy\/hhinc\/default.asp\" title=\"Median Household Income, Washington State | OFM\">as reported by the Washington State Office of Financial Management<\/a>.<\/p>\n<p>The historic standard for &#8220;affordable&#8221; housing is that monthly costs do not exceed 30% of one&#8217;s income.  Therefore, the formula for the affordability index is as follows:<\/p>\n<div style=\"width: 412px; font-size: 0.8em; text-align: center; margin:0 auto;\"><a href=\"http:\/\/seattlebubble.com\/blog\/2009\/03\/06\/simple-affordability-calculator\/\" title=\"Click for a Simple Affordability Calculator\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2010\/09\/Affordability-Formula.png\" style=\"border:0;\" title=\"Affordability Formula\" alt=\"Affordability Formula\" width=\"412\" height=\"50\"><\/a><\/div>\n<p>For a more detailed examination of what the affordability index is and what it isn&#8217;t, I invite you to <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/08\/27\/what-the-heck-is-the-affordability-index-anyway\/\" title=\"What the Heck is the Affordability Index, Anyway?\">read this 2009 post<\/a>.  Or, to calculate your the affordability of your own specific income and home price scenario, <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/03\/06\/simple-affordability-calculator\/\" title=\"Click for a Simple Affordability Calculator\">check out my Affordability Calculator<\/a>.<\/p>\n<p>So how does affordability look as of June?  Below the pre-bubble average for the first time in almost three years:<\/p>\n<p style=\"margin: 5px auto; width: 600px; font-size: 0.8em; text-align: center;\"><a href=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Index_2013-06.png\" title=\"King County Affordability Index\" rel=\"lightbox[26914]\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Index_2013-06-600x435.png\" style=\"border: 0;\" title=\"King County Affordability Index - Click to enlarge\" alt=\"King County Affordability Index\" width=\"600\" height=\"435\" \/><\/a><\/p>\n<p>I&#8217;ve marked where affordability would be if interest rates were at a more sane level of 6%.  An affordability index of 83.3 is slightly <em>below<\/em> where the index was in August 2005 when I first started Seattle Bubble (rates were 5.82% at the time), and lower than the lowest point the index hit in early 2000.<\/p>\n<p>As I said in the last few affordability updates, the affordability index was only still looking good thanks to still-crazy-low interest rates.  With those rates now headed back up, affordability is crashing hard.  I expect this to rapidly put the brakes on the price increases we&#8217;ve seen over the last year or so.<\/p>\n<p>Here&#8217;s a look at the index for Snohomish County and Pierce County since 2000:<\/p>\n<p style=\"margin: 5px auto; width: 600px; font-size: 0.8em; text-align: center;\"><a href=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Snohomish-Pierce_2013-06.png\" title=\"Snohomish \/ Pierce County Affordability Index\" rel=\"lightbox[26914]\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Snohomish-Pierce_2013-06-600x435.png\" style=\"border: 0;\" title=\"Snohomish \/ Pierce County Affordability Index - Click to enlarge\" alt=\"Snohomish \/ Pierce County Affordability Index\" width=\"600\" height=\"435\" \/><\/a><\/p>\n<p>Things are better in the outer counties, but still crashing just as quickly.<\/p>\n<p>Later this week I&#8217;ll post updated versions of my charts of the &#8220;affordable&#8221; home price and income required to afford the median-priced home.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>With the dramatic increase in mortgage interest rates that we&#8217;ve seen over the last few weeks, I thought that it now would be a good time to take another look at what the affordability numbers look like. As a reminder, the affordability index is based on three factors: median single-family home price as reported by&#8230;<\/p>\n","protected":false},"author":2,"featured_media":26917,"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: Interest Rate & Price Increases Quickly Killing Affordability http:\/\/wp.me\/pe2Bv-706","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-26914","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":"<!-- This site is optimized with the Yoast SEO plugin v26.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Interest Rate &amp; Price Increases Quickly Killing Affordability \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\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Interest Rate &amp; Price Increases Quickly Killing Affordability \u2022 Seattle Bubble\" \/>\n<meta name=\"twitter:description\" content=\"With the dramatic increase in mortgage interest rates that we&#8217;ve seen over the last few weeks, I thought that it now would be a good time to take another look at what the affordability numbers look like. As a reminder, the affordability index is based on three factors: median single-family home price as reported by...\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Index_2013-06.png\" \/>\n<meta name=\"twitter:creator\" content=\"@The_Tim\" \/>\n<meta name=\"twitter:site\" content=\"@SeattleBubble\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"The Tim\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/\",\"url\":\"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/\",\"name\":\"Interest Rate & Price Increases Quickly Killing Affordability \u2022 Seattle Bubble\",\"isPartOf\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Index_2013-06.png\",\"datePublished\":\"2013-07-10T17:00:48+00:00\",\"dateModified\":\"2013-07-10T17:30:42+00:00\",\"author\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f\"},\"breadcrumb\":{\"@id\":\"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/#primaryimage\",\"url\":\"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Index_2013-06.png\",\"contentUrl\":\"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Index_2013-06.png\",\"width\":910,\"height\":661},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/seattlebubble.com\/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Interest Rate &#038; Price Increases Quickly Killing Affordability\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#website\",\"url\":\"https:\/\/seattlebubble.com\/blog\/\",\"name\":\"Seattle Bubble\",\"description\":\"local\u00a0real\u00a0estate\u00a0news, statistics,\u00a0and\u00a0commentary without\u00a0the\u00a0sales\u00a0spin.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/seattlebubble.com\/blog\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f\",\"name\":\"The Tim\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/image\/37756956c11dcc50d2559761ffa5ee70\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g\",\"caption\":\"The Tim\"},\"description\":\"Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer \/ internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.\",\"sameAs\":[\"http:\/\/SeattleBubble.com\/\",\"http:\/\/facebook.com\/is.totally.pointless\",\"https:\/\/x.com\/The_Tim\"],\"url\":\"https:\/\/seattlebubble.com\/blog\/author\/timothyellis\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Interest Rate & Price Increases Quickly Killing Affordability \u2022 Seattle Bubble","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/","twitter_card":"summary_large_image","twitter_title":"Interest Rate & Price Increases Quickly Killing Affordability \u2022 Seattle Bubble","twitter_description":"With the dramatic increase in mortgage interest rates that we&#8217;ve seen over the last few weeks, I thought that it now would be a good time to take another look at what the affordability numbers look like. As a reminder, the affordability index is based on three factors: median single-family home price as reported by...","twitter_image":"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Index_2013-06.png","twitter_creator":"@The_Tim","twitter_site":"@SeattleBubble","twitter_misc":{"Written by":"The Tim","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/","url":"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/","name":"Interest Rate & Price Increases Quickly Killing Affordability \u2022 Seattle Bubble","isPartOf":{"@id":"https:\/\/seattlebubble.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/#primaryimage"},"image":{"@id":"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/#primaryimage"},"thumbnailUrl":"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Index_2013-06.png","datePublished":"2013-07-10T17:00:48+00:00","dateModified":"2013-07-10T17:30:42+00:00","author":{"@id":"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f"},"breadcrumb":{"@id":"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/#primaryimage","url":"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Index_2013-06.png","contentUrl":"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Index_2013-06.png","width":910,"height":661},{"@type":"BreadcrumbList","@id":"https:\/\/seattlebubble.com\/blog\/2013\/07\/10\/interest-rate-and-price-increases-quickly-killing-affordability\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/seattlebubble.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Interest Rate &#038; Price Increases Quickly Killing Affordability"}]},{"@type":"WebSite","@id":"https:\/\/seattlebubble.com\/blog\/#website","url":"https:\/\/seattlebubble.com\/blog\/","name":"Seattle Bubble","description":"local\u00a0real\u00a0estate\u00a0news, statistics,\u00a0and\u00a0commentary without\u00a0the\u00a0sales\u00a0spin.","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/seattlebubble.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/7de7c0dd14bee1a2c67f7ce86bc4505f","name":"The Tim","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/seattlebubble.com\/blog\/#\/schema\/person\/image\/37756956c11dcc50d2559761ffa5ee70","url":"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/19e5770990a1681615608091b2de571b10c3e03bbac7d07bb2ae15297ee72fbc?s=96&d=retro&r=g","caption":"The Tim"},"description":"Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer \/ internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.","sameAs":["http:\/\/SeattleBubble.com\/","http:\/\/facebook.com\/is.totally.pointless","https:\/\/x.com\/The_Tim"],"url":"https:\/\/seattlebubble.com\/blog\/author\/timothyellis\/"}]}},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/07\/Affordability-Index_2013-06.png","jetpack_shortlink":"https:\/\/wp.me\/p6wh0F-706","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/posts\/26914","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/comments?post=26914"}],"version-history":[{"count":0,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/posts\/26914\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/media\/26917"}],"wp:attachment":[{"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/media?parent=26914"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/categories?post=26914"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/tags?post=26914"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/seattlebubble.com\/blog\/wp-json\/wp\/v2\/coauthors?post=26914"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}