The California Association of Realtors recently released its Housing Affordability Index (HAI) for the 1st quarter of 2018, which measures the percentage of households that can afford to buy the median priced single family dwelling (house).
In this analysis, affordability is affected by 3 major factors: county median house price, mortgage interest rates, and the distribution of household incomes within the county. (Housing Affordability Index Methodology). The HAI uses house prices exclusively and if condos were included in the calculation, median home prices would decline, affordability would increase and income requirements and PITI costs would be reduced as well. (SF now has more condo sales than house sales, but that is not the case in other Bay Area counties.)
If the HAI Index incorporates changes to the federal tax code (effective 1/1/18) limiting the deductibility of interest expenses and property taxes, it will presumably have a negative effect on affordability percentages in 2018. However, as of Q1 2018, the CAR Index has not yet been able to adjust their calculations for these changes.
Affordability Percentage by Bay Area County
Minimum Qualifying Income to Buy Median Priced House Assumes 20% down payment and including principal, interest, property tax and insurance costs.
Bay Area Median House Prices
San Francisco-Only Median House Price Appreciation by Quarter since 2012
Mortgage Interest Rates since 1981
Short-Term Changes in Mortgage Interest Rates
Bay Area Median House Prices since 1990
If one looks at charts graphing affordability percentages, home prices, market rents, hiring/employment trends and to some degree even stock market trends, one sees how often major economic indicators move up or down in parallel.Monthly Rental Housing Costs