Historically low interest rates are masking a hike in prices and decrease in home affordability in the Sacramento region, online real estate tracker Zillow said today.
In early 2012, when prices hit bottom, the combination of low prices and ultra-low interest rates meant homes were the most affordable they'd been in decades. But the median price of homes in the Sacramento region has ticked steadily upward in the past year, driven by high demand and limited supply.
Zillow analyzed historical data and found that average homeowners in the Sacramento region spent about 3.4 times their median annual income on the purchase price of a home between 1985 and 1999. By the end of last year, that ratio had risen to 3.7 and is likely to rise further, Zillow said.
"The days of historically high levels of housing affordability are numbered," Zillow chief economist Stan Humphries said in a news release. "Current affordability is almost entirely dependent on low interest rates, and there's no doubt that rates will begin to rise in the next few years."
Call The Bee's Hudson Sangree, (916) 321-1191.