{"id":4323,"date":"2009-02-19T06:00:04","date_gmt":"2009-02-19T14:00:04","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=4323"},"modified":"2009-07-30T20:03:09","modified_gmt":"2009-07-31T03:03:09","slug":"bottom-calling-affordability-index-forecast","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2009\/02\/19\/bottom-calling-affordability-index-forecast\/","title":{"rendered":"Bottom-Calling: Affordability Index Forecast"},"content":{"rendered":"<p>The affordability index is something we have visited multiple times in the past on these pages.  If the concept is new to you, or you just feel like a quick refresher, I recommend you check out the following posts:<\/p>\n<ul>\n<li><a href=\"http:\/\/seattlebubble.com\/blog\/2006\/06\/19\/seattle-soft-landing-do-the-math\/\" title=\"Seattle Soft Landing: Do The Math\">Seattle Soft Landing: Do The Math<\/a><\/li>\n<li><a href=\"http:\/\/seattlebubble.com\/blog\/2006\/11\/03\/a-question-of-affordability\/\" title=\"A Question Of Affordability\">A Question Of Affordability<\/a><\/li>\n<li><a href=\"http:\/\/seattlebubble.com\/blog\/2008\/03\/21\/revisiting-seattles-soft-landing\/\" title=\"Revisiting Seattle\u2019s Soft Landing\">Revisiting Seattle\u2019s Soft Landing<\/a><\/li>\n<li><a href=\"http:\/\/seattlebubble.com\/blog\/2008\/02\/28\/king-county-affordability-1950-2007\/\" title=\"King County Affordability: 1950-2007\">King County Affordability: 1950-2007<\/a><\/li>\n<\/ul>\n<p>Today&#8217;s bottom-calling forecast is based on the premise that the affordability index for King County will return to its previous level.<\/p>\n<p>Here are our basic assumptions for the Affordability Index forecast:<\/p>\n<ul>\n<li>The baseline affordability index is 109.6 (1985-1999 average).<\/li>\n<li>Price corrections will overshoot by 10% on the way back down.<\/li>\n<li>Therefore, the target affordability index is 120.6.<\/li>\n<li>Affordability will continue to recover at roughly the same rate it has since bottoming out in August 2007.<\/li>\n<li>Over the next few years:\n<ul>\n<li>Interest rates will hold roughly steady at ~5%.<\/li>\n<li>Incomes will be more or less flat.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>Given these assumptions, here&#8217;s a rough picture of what King County&#8217;s median single-family home price would look like through early 2011:<\/p>\n<p style=\"width: 600px; margin: 5px auto; font-size: 0.8em; text-align: center;\"><a href=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2009\/02\/bottom-calling-method-4_affordability.png\" title=\"Bottom-Calling Method 4: Affordability Index Forecast\" rel=\"lightbox[4323]\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/seattlebubble.com\/blog\/wp-content\/uploads\/2009\/02\/bottom-calling-method-4_affordability-600x435.png\" style=\"border: 0; margin: 5px;\" title=\"Bottom-Calling Method 4: Affordability Index Forecast - Click to enlarge\" alt=\"Bottom-Calling Method 4: Affordability Index Forecast\" width=\"600\" height=\"435\"><\/a><\/p>\n<p>Using the Affordability Index forecast model, Seattle-area home prices (as measured by the NWMLS King County SFH median) will hit bottom sometime around early 2011, giving up just under 40% of their peak values.<\/p>\n<p>This prediction is suprisingly similar to yesterday&#8217;s <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/18\/bottom-calling-simple-mirror-forecast\/\" title=\"Bottom-Calling: Simple Mirror Forecast\">Simple Mirror Forecast<\/a>, arriving at the same month for a bottom, with prices differing by less than five percentage points.<\/p>\n<p>As I stated in the post <a href=\"http:\/\/seattlebubble.com\/blog\/2006\/11\/03\/a-question-of-affordability\/\" title=\"A Question Of Affordability\">A Question Of Affordability<\/a>, I believe that in order to see affordability shift to a &#8216;new plateau,&#8221; there must be a fundamental shift in the desirability of an area relative to other cities across the country, such as <a href=\"http:\/\/seattlebubble.com\/blog\/2008\/02\/28\/king-county-affordability-1950-2007\/\" title=\"King County Affordability: 1950-2007\">was seen between the &#8217;70s and &#8217;80s in Seattle<\/a>.<\/p>\n<p>The Seattle area last saw affordability in the 100-110 range as recently as 2003.  Has the area really become considerably more desirable since then?  If the answer is no, then I predict that this forecast has a pretty good chance of coming true.<\/p>\n<p><span style=\"font-weight: bold; font-size: 1.2em;\">Method 4: Affordability Index Forecast (Summary)<\/span><br \/>\n<b>Bottom Month:<\/b> January 2011<br \/>\n<b>Bottom Value:<\/b> 39.8% off peak<br \/>\n<b>Likelihood*:<\/b> 20%<\/p>\n<p><span style=\"font-size: 85%;\">* Likelihood is a totally subjective value assigned according to The Tim&#8217;s gut feeling.  Treat it accordingly.<\/span><\/p>\n<p><span style=\"font-weight: bold; font-size: 1.2em;\">Bottom-Calling Week on Seattle Bubble<\/span><\/p>\n<ul>\n<li>Introduction: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/16\/bottom-calling-week-on-seattle-bubble\/\" title=\"Bottom-Calling Week on Seattle Bubble\">Bottom-Calling Week on Seattle Bubble<\/a><\/li>\n<li>Method 0: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/16\/bottom-calling-week-on-seattle-bubble\/#method0\" title=\"Blind Optimism\">Blind Optimism<\/a><\/li>\n<li>Method 1: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/16\/bottom-calling-inventory-based-forecast\/\" title=\"Inventory-Based Forecast\">Inventory-Based Forecast<\/a><\/li>\n<li>Method 2: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/17\/bottom-calling-dollars-per-square-foot-linear-forecast\/\" title=\"Dollars per Square Foot Linear Forecast\">Dollars per Square Foot Linear Forecast<\/a><\/li>\n<li>Method 3: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/18\/bottom-calling-simple-mirror-forecast\/\" title=\"Simple Mirror Forecast\">Simple Mirror Forecast<\/a><\/li>\n<li><strong>Method 4: Affordability Index Forecast<\/strong><\/li>\n<li>Method 5: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/20\/bottom-calling-san-diego-lag-forecast\/\" title=\"San Diego Lag Forecast\">San Diego Lag Forecast<\/a><\/li>\n<li>Conclusion: <a href=\"http:\/\/seattlebubble.com\/blog\/2009\/02\/20\/bottom-calling-so-wheres-the-bottom\/\" title=\"So Where's the Bottom?\">So Where&#8217;s the Bottom?<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>The affordability index is something we have visited multiple times in the past on these pages. If the concept is new to you, or you just feel like a quick refresher, I recommend you check out the following posts: Seattle Soft Landing: Do The Math A Question Of Affordability Revisiting Seattle\u2019s Soft Landing King County&#8230;<\/p>\n","protected":false},"author":2,"featured_media":0,"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":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[206,8],"tags":[28,292,14],"coauthors":[],"class_list":["post-4323","post","type-post","status-publish","format-standard","hentry","category-features","category-stats","tag-affordability","tag-bottom-calling","tag-predictions"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bottom-Calling: Affordability Index Forecast \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\/2009\/02\/19\/bottom-calling-affordability-index-forecast\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Bottom-Calling: Affordability Index Forecast \u2022 Seattle Bubble\" \/>\n<meta name=\"twitter:description\" content=\"The affordability index is something we have visited multiple times in the past on these pages. 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