Housing Affordability

Critical perspectives on the dynamics influencing housing affordability

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Consumer house-buying power in 2018 is


the rate from 2000.

Real House Prices* are


below their housing boom peak in 2006.

Source RHPI, October, 2018.

Average household income in 2018 is nearly


higher than it was in 2000.

Real house prices* are


lower than they were in 2000.

Source: RHPI, October, 2018.

"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.

"Even as Millennials continued to delay marriage and family formation and pursue higher education levels, the Homeownership Progress Index declined only moderately from 2015 to 2016," said Mark Fleming, chief economist at First American.

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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