Housing Affordability

Critical perspectives on the dynamics influencing housing affordability

Consumer house-buying power in 2020 is

3x

the rate from 2000.

Real House Prices are

48%

below their housing boom peak in 2006.

Average household income in 2020 is nearly

72%

higher than in January 2000.

Real house prices are

26%

less 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."

Mark Fleming
Chief Economist

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.

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