ATTOM Data Solutions’ Q4 2016 Affordability Index calculates the percentage of wages that U.S. homeowners will pay baed on a 3 percent down payment and a 30-year fixed mortgage on a county-wide basis. These percentages are compared to heir historical norms to calcu\ate the affordability index.
By this measure home affordability declined to an eight-year low in the fourth quarter of 2016 as homeowners must spend 36.9 percent of their wages on mortgage payments. Nationwide, 29 percent of counties are less affordable than their historic norms.
Not surprisingly, in the Bay Area Alameda, Contra Costa, San Francisco and Sonoma counties are currently less affordable than their historic norms.
Many analysts see price appreciation and slow wage growth coupled with rising mortgage rates as indicators that the affordability index will not improve in 2017.