Last time we looked at affordability, it was still pretty tame. But of course with the big jump in prices, these things change quickly.
Taking the 2016 price as the average of the last 3 months ($750k), let’s redo the graph.
Just in the last few months, mortgage payments have jumped a lot relative to income, going from a relative low to middle of the road. Consider this is happening while mortgage rates have continued to move down. I don’t think that rates are going up anytime soon, but I don’t think there is nearly as much headroom in this rally as previous ones.
For SFH affordability, we seem to move in a band that moves up slowly over time which makes sense in a densifying city. In the past we’ve had dropping mortgage rates that helped sustain price booms, but unless the market completely detaches from local buyers, I can’t see that happening this time around.