Inflation-adjusted "typical" mortgage payments for California cities show most are still shy of their peaks last decade.

Affordability for for-sale houses in a market is a hard-to-measure value. Median incomes in the location, and where they're trending are one yardstick to use to explore whether house prices are "out over their skis" in a market. Median area rent comparisons are another. Debate goes on as to what helpfully defines and delimits "affordability," but it's generally regarded to be a rather elastic term with a strong correlation to the broad direction of a local economy and its wage trends.

CoreLogic data analyst Andrew LePage takes a close and careful look at the monthly mortgage payment, which he notes is a key measure of whether a home is affordable, as that's the "hurdle" a lender looks at to decide whether a borrower can qualify for a mortgage loan. LePage writes:

The typical payments this fall for 11 U.S. metro areas evaluated were still 20 to 50 percent below peak levels reached in prior cycles (examples in Figure 4).3 In the Dallas metro area, for example, the median sale price reached a new peak of about $252,000 earlier this year, but in September the typical mortgage payment remained 24 percent below its inflation-adjusted peak in spring 2000. The New York metro area’s $410,000 median sale price this September was only 11 percent below its summer 2007 peak, but the typical mortgage payment was still 42 percent lower than when it peaked in 2007.

LePage's analysis points up the importance of interest rates as a determiner of rather dramatic and rapid changes there can be to monthly payments and their tolerance points. Stay tuned.

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