This table – or similar – is widely shared on social media, showing the affordability of homes has vanished as the price to income ratio has gone from 2.1 to 5.3.
But there is a glaring error in this calculation …
The error is it assumes homes bought in the past are identical to homes purchased today.
But home sizes have been supersized over this time period. If we normalize the ratio for the change in square footage alone (and ignore other home improvements and features), the price to income ratio – by square feet – is remarkably similar.
