"Affordability" is basically an inflation-adjusted mortgage payment for a median house, normalized so that July 2000 = 100%. To measure inflation, I use CPI. (Actual incomes are good too, but incomes in San Diego county got artificially inflated due to all the bubble money flowing in.)
Some assumptions that go into this model:
* Average conventional mortgage rate as published by St Louis Fed
* Coast and RB/RP/4S etc. require jumbo mortgages (1% premium over conventional rate, starting in August 2007)
* Down payment equal to 20% of July 2000 median house price, adjusted for inflation
* To simplify things, it's assumed that the entire balance is financed using the aforementioned rate (although in reality, the amount borrowed would be above 80% of purchase price, so a 2nd mortgage with higher interest rate would be required)
* Property tax equal to 1% of purchase price
Things are rapidly normalizing, partly because of falling prices, partly because of low mortgage interest rates.
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