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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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