The trade association determines affordability by computing the median family income and the number of homes folks making that much money can afford. The median family income for the metropolitan area of Seattle, including Everett and Bellevue, was $81,400 for the fourth quarter of 2008. According to the NAHB, only 40.6 percent of homes sold here were deemed affordable, with a median sale price was $335,000.
Nationally, home prices have fallen to a four year low. The NAHB pegged the fourth quarter median home price at $190,000. That's a drop of $64,000 since prices peaked in 2005 at $254,000, according NAHB data.
The builder's association data corroborates what Standard and Poor's reported last December in its Case-Shilling Home Price Indices.
"In October, we ... saw three new markets enter the 'double-digit' club. Atlanta, Seattle and Portland are reporting annual rates of decline of 10.5 percent, 10.2 percent and 10.1 percent, respectively," David M. Blitzer, Chairman of the Index committee, said in a news release. "While not yet experiencing as severe a contraction as in the Sunbelt, it seems the Pacific Northwest and Mid-Atlantic South is not immune to the overall demise in the housing market.”
Standard and Poor's is predicting that Seattle home prices will continue to fall, eventually bottoming out in 2011.
"The bear market continues; home prices are back to their March 2004 levels," Blitzer said.
But falling home prices aren't necessarily a bad thing, unless of course you own a home. While Seattle remains one of the most unaffordable cities in the country, this real estate market correction could help alleviate that.
"Falling home prices and very favorable mortgage rates both contributed to the housing affordability gains we saw in the fourth quarter of 2008," said NAHB Chairman Joe Robson, a home builder from Tulsa, OK. "However, at the same time, worsening economic conditions, historically low consumer confidence and uncertainty about future home prices kept many qualified buyers on the sidelines."
According to the press release, Robson said the NAHB is hoping that the "newly improved first-time home buyer tax credit" will lure skittish home buyers back into the market.
Topping the list of least affordable places to buy a house is New York, followed by San Francisco. The cheapest is Indianapolis.
You can read the National Association of Home Builders' press release here.
The Standard and Poor's Case-Shilling Home Price Indices news release can be found here.