The current slowdown of the real estate market is being blamed on higher interest rates and/or affordability. Interest rates have moved over the past five years from lows in the 3.40% range to the current 4.94% range. You’d think 1% would not make a huge difference in qualifying but when you add in the lack of affordability in our area you find consumers right at their limits. And not only are they hitting their max for loan qualifying, many are saying NO to a life where the mortgage payment dominates their household monthly outlays. What makes the market tick in the Sonoma County area is Affordability. Currently 1 in 5 can afford to purchase the median home price. We are among the top counties with affordability issues. As you can see below, our affordability number is at 20% who can afford the median home price. But look at San Francisco, San Mateo and Santa Clara! The most affordable county in the Bay Area is Solano but that dropped 6 points over the past year. How do we increase affordability? #1 lower interest rates, #2 building more affordable housing, #3 the economic boom we’re in needs to generate higher wages.