{"id":27161,"date":"2013-08-16T09:00:13","date_gmt":"2013-08-16T16:00:13","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=27161"},"modified":"2013-10-23T18:19:57","modified_gmt":"2013-10-24T01:19:57","slug":"affordability-index-falls-below-100-hits-4-year-low","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2013\/08\/16\/affordability-index-falls-below-100-hits-4-year-low\/","title":{"rendered":"Affordability Index Falls Below 100, Hits 4-Year Low"},"content":{"rendered":"<p>As volatile as interest rates and home prices have both been this year, I thought it would be good to make the affordability index more of a regular post.<\/p>\n<p>So how does affordability look as of July?  Not great.  The index fell below 100 (i.e. the median-priced home is affordable to a median-income household) for the first time since July 2009.<\/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\/08\/Affordability-Index_2013-07.png\" title=\"King County Affordability Index\" rel=\"lightbox[27161]\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/08\/Affordability-Index_2013-07-600x435.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 82.0 is once again <em>below<\/em> where the index was in August 2005 when I first started Seattle Bubble (rates were 5.82% at the time), but is still quite a bit above the low point in the 60s that the index hit in 2007.<\/p>\n<p>I still expect this rapid deterioration in affordability to 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\/08\/Affordability-Snohomish-Pierce_2013-07.png\" title=\"Snohomish \/ Pierce County Affordability Index\" rel=\"lightbox[27161]\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2013\/08\/Affordability-Snohomish-Pierce_2013-07-600x435.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>Snohomish County&#8217;s affordability index is at its lowest point in 43 months, while Pierce County&#8217;s index is only at a 29-month low.<\/p>\n<p>Next 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.  Hit the jump for the affordability index methodology.<\/p>\n<p><!--more-->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","protected":false},"excerpt":{"rendered":"<p>As volatile as interest rates and home prices have both been this year, I thought it would be good to make the affordability index more of a regular post. So how does affordability look as of July? Not great. The index fell below 100 (i.e. the median-priced home is affordable to a median-income household) for&#8230;<\/p>\n","protected":false},"author":2,"featured_media":27165,"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: Affordability Index Falls Below 100, Hits 4-Year Low http:\/\/wp.me\/pe2Bv-745","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-27161","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>Affordability Index Falls Below 100, Hits 4-Year Low \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\/08\/16\/affordability-index-falls-below-100-hits-4-year-low\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Affordability Index Falls Below 100, Hits 4-Year Low \u2022 Seattle Bubble\" \/>\n<meta name=\"twitter:description\" content=\"As volatile as interest rates and home prices have both been this year, I thought it would be good to make the affordability index more of a regular post. 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