Critical perspectives on the dynamics influencing housing affordabilitySubscribe for Updates
Consumer house-buying power so far in 2022 is2.4x
the rate from 2000.
Real House Prices are13%
below their 2006 housing boom peak.
Median household income in 2022 so far is75%
higher than in January 2000.
Real house prices are29%
more expensive than in January 2000.
"Critically examining housing affordability requires a broad perspective that includes the forces shaping consumer purchasing power, which support thoughtful debate about affordability and better housing decisions by buyers, sellers and real estate professionals."
The traditional perspective on housing affordability is fixated on the actual prices of home and the changes in those prices, which doesn't consider what really matters to potential buyers - their purchasing power, or how much they can afford to buy.
In short, real, purchasing power-adjusted house prices provide a more relevant way to compare changes in affordability over time because they are adjusted for differences in income and interest rates.
"Potential homeownership demand represented by the HPRI increased one percentage point in 2019 compared with 2018, based on changes in the underlying lifestyle, societal and economic data."
First American's proprietary Homeownership Progress Index provide a unique view of homeownership and its underlying components over time at the national, state and market level.
First American's proprietary Real House Price Index (RHPI) measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power.Visit Data Center
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Higher mortgage rates leave existing homeowners feeling ‘rate locked-in’, to their existing homes. And existing homeowners are the largest source of buyers. Fewer homes for sale and fewer sales. The more the rate lock-in effect, the fewer sales. pic.twitter.com/Uqp4Oqm6L7— Mark Fleming (@mflemingecon) May 26, 2022