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Thursday, June 10, 2021

On the May 19, 2021 New Home Insights Podcast presented by John Burns Real Estate Consulting, the host interviewed industry expert Barry Habib of MBS Highway.

In the podcast, Barry presents a different way of considering home affordability. His thoughts are summarized by the Real Estate Consulting website:

  • You might see headlines like, “Home prices have increased 10% while incomes have increased by only 4%. Therefore, this market is becoming increasingly unaffordable.” This is a flawed interpretation.
  • A 10% increase in housing costs does not require a 10% increase in income to maintain the same level of affordability. A 10% increase in a housing payment of $1,000 is $100. Assuming an existing income level of $5,000, an extra $100 needed for the increase in payment is only a 2% increase in income.

So even though median home prices have increased 10%, since hourly incomes have risen 4% and weekly incomes have risen 7%, those homes are actually more affordable than they have been in the past.

Posted by riverwoodadmin at 6/11/2021 1:02:00 AM
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