Of the 100 largest metropolitan areas (based on annual permit activity):

• Only 13 markets are below their historical median affordability level, 3 are exactly at their median and 84 are above the median.
   
• The four markets that have remained very inexpensive are Cincinnati, Indianapolis, Cleveland and Pittsburgh.
   
• Nine markets have even worse affordability levels than when mortgage rates were 18%+ in the early 1980s: New York, Washington, D.C., Los Angeles, Seattle, Portland (Oregon), Baltimore, Edison (New Jersey), Nassau (New York) and Naples.

Our methodology compares current affordability in each market to historic affordability in the market to determine whether housing is more or less expensive in the market than in price downturns. From the map below, it is evident that the overpriced markets are those along the coasts, while the inland markets tend to be less overpriced. Supply constraints make the coastal markets susceptible to price bubbles, while plentiful supply makes the inland markets susceptible to oversupply bubbles.

About the Barometer
The Housing Cycle Barometer™ calculates the ratio between home prices and income levels, and the ratio between mortgage payments and income levels. Then, we analyze 25 years of history in each metropolitan area, and compare the current ratios to the median ratios in each area. The down payment and mortgage payments are appropriately weighted based on total expenditures over the life of a typical home purchase. This methodology accurately determines which markets are overpriced and underpriced, even in an environment with historically low mortgage rates.

The Barometer ranges from 0 to 10, and is generally categorized as follows:

• Potential Housing Bubble: 7.5 to 10.0
• Overpriced in Comparison to History: 5.0 to 7.5
• No Housing Bubble: 0.0 to 5.0