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.