Outlook: Stormy, concerns for the future
Housing affordability has been decreasing since 2013. While prices are still affordable for the "average" home buyer, they are not affordable for first-time home buyers.
Housing Affordability Index (University of Washington: Runstad Center for Real Estate Studies)
The Runstad Center for Real Estates Studies Housing Affordability index measures the ability of a middle-class family to purchase a home. For example, an index of 126 means that a family earning the median income has 26% more income than is needed to qualify for a mortgage on a median-priced home. The index is calculated using housing prices, incomes and interest rates.
The index is also calculated for the average first-time home buyer. The first-time home buyer index assumes household income is 70% of the county median, home purchase price is 85% of the median price, and the down payment is 10% instead of 20%.
Housing affordability has decreased since 2013 but remains above the pre-recession years of 2006-2008.
After the economic recession in 2008, housing affordability increased due to low interest rates and large supply (partly the result of a large number of foreclosures). Since 2013 however affordability decreased as the economy recovered. First-time home buyers have been especially hard hit by increasing prices.