Based on the California Association of Realtors’ Housing Affordability Index (HAI), the Paragon Real Estate Group reports on the real estate market crash in San Francisco in 2008 and affordability trends over time. Putting to blame the nation’s economic struggles during that time, the report says home price fluctuations “did not occur in isolation.”
The report notes, “Dwindling affordability is certainly a symptom of overheating, of a market being pushed perhaps too high. Looking at the chart above, it’s interesting to note that the markets of all Bay Area counties hit similar and historic lows at previous market peaks in 2006-2007, i.e. the pressure that began in the San Francisco market spread out to pressurize surrounding markets until all the areas bottomed out in affordability.”
Affordability ratios are based on population, employment, wealth, the high-tech boom, financial markets, rental prices, home supply and more. The graph below of the S&P 500 Index vs. Shanghai Composite Index shows the stagnancy of the S&P.
Graphs provided by Paragon Real Estate Group.