Housing Affordability
by Tom on January 14, 2009
in house prices
The map below shows the affordability of various housing markets. I got this from John Burns Real Estate Consulting. I hope you find it interesting…..
HOUSING CYCLE BAROMETER™
Updated Through January 2009
Data Through November 2008
The Housing Cycle Barometer™ calculates the ratio between housing costs for the median-priced existing home and income levels. Then, we analyze 26+ years of history in each metropolitan area, and compare the current ratios to the median ratios in each area. The down payment and mortgage payments are appropriately weighted based on total expenditures over the life of a typical home purchase. This methodology accurately determines which markets are overpriced and underpriced, even in an environment with historically low mortgage rates.
The Barometer ranges from 0 to 10, and is generally categorized as follows:
- Areas of Significant Affordability Concern: 7.6 to 10.0
- Areas of Affordability Concern: 5.0 to 7.5
- Areas of Less Affordability Concern: 0.0 to 4.9
Tom here – we’re getting there, but I don’t believe that the ratio of incomes to house prices is where it needs to be in many areas of the country.
Tom
Interesting view of our market as opposed to others around the country. I think the thing to watch will be the changes to the HCB as we see more unemployment even as housing prices decline.