Rising incomes and other affordability markers have tempered the impact of rising home prices in hot West Coast markets, according to Pro Teck Valuation Services.
The top 10 real estate markets tracked by Pro Teck's Home Value Forecast in November included five in California and four in Washington state.
But the Waltham, Mass., valuation firm's affordability index shows that prices haven't reached inhibitive proportions — at least not yet. A reading of 100 indicates that a household earning the median income can afford mortgage costs; decreasing numbers indicate lower affordability.
The index takes into account an area's median income and the mortgage payment required for the acquisition of a median-priced home, as well as interest rates.
Despite a steady rise in home values in San Jose, for instance, the affordability index is leveling off back to the 70-range that was the city's historic norm. Stockton, Calif., on the other hand, has an affordability index in the 120-range, also its historic norm.
"San Jose and Stockton are examples of what we see for all of our top 10 [markets] — while home prices are increasing, affordability is at or above historic norms and nowhere near 'bubble' territory of 2004-2007," said Pro Teck CEO Tom O'Grady.
