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Despite Price Gains Affordability Depends on Geography
Tuesday, January 19, 2016
Rising prices, especially in major cities like San
Francisco, Seattle, and Boston which hit new price highs in 2015 have created
renewed concerns about affordability.
However CoreLogic research analyst Andrew LePage, writing
for the company's Insights blog says
that looking at housing from the prospective of mortgage payments over the last
quarter century one sees that affordability doesn't look so bad, especially at
more local levels.
LePage says the monthly mortgage payment is a key measure of
affordability since that is the number used to qualify a borrower. He looked at the ups and downs of payments
calculated from a local area's median sale price and adjusted for inflation to
derive what he calls a typical mortgage payment over time. The calculation assumes a 20 percent
downpayment and a 30-year fixed rate mortgage at the prevailing Freddie Mac
interest rate.
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