Great article in Barrons:You Still Might Be Able to Afford a House in San Francisco
Just a little snipit.
?Taking a longer view from before the financial crisis, the biggest housing cost increases between 2000 and 2017 were in Miami, Los Angeles, and San Diego (about 80%) while the smallest increases were in Cleveland, Detroit, Atlanta, and Cincinnati (about 33%). In the middle were Pittsburgh, Denver, and Philadelphia.
These numbers, of course, offer zero information about the change in affordability in each city over these periods, much less the change in relative affordability between cities. That requires comparing changes in average housing costs with changes in average spending power.
The Bureau of Economic Analysis provides estimates of household incomes for every metro area of the U.S. The standard definition of personal income, however, includes the imputed income homeowners ?earn? by not having to rent. The biggest source of variation in this ?income stream? is the long descent in mortgage interest rates, which is why ?rental income of persons? has ballooned from 0.5% of total personal income in 1990 to 1.5% in 2007 to more than 4% since 2014. All this makes the standard income numbers invalid for calculating housing affordability.?
?Going further back to when the data begin in 2001, average employee compensation has increased the most in the Bay Area (65%) and in Seattle (60%), while increasing the least in Detroit (26%), Miami (29%), and Atlanta (32%).?
