We have dealt a lot recently with historically low interest rates and their implications on not only the cost of housing and mortgages, but also implications for consumer credit and inflation. Although we have explained home price affordability in the San Francisco Bay Area before, we haven’t discussed the large variance in regional real estate prices.
housing price index
Here’s a shocker… Housing in 2008 was less affordable than in 2007, by one important measure. The government defines affordable housing (either renting or owning) as paying less than 30% of your pre-tax income for shelter. In 2008, 600,000 additional people (from 2007) met this criteria of paying more for housing. Unexpected.