It's impossible to look into the topic of homeownership without coming across a headline that declares the decline in housing affordability to be a crisis. When we put the most current affordability numbers in context, we quickly see that, while homes are less affordable than they have been in recent years, they are still more affordable than they have been historical.

The newest Monthly Mortgage Monitor from Black Knight, a leading source of data and analytics for the mortgage sector, offers a new examination of the affordability situation. The following are some of the findings of the report:

"Over the first nine months of 2021, the monthly payment required to purchase the average priced home with a 20% down 30-year fixed rate mortgage increased by nearly 20% (+$210)." . . The average home purchase now takes 21.6 percent of median household income to cover the monthly mortgage payment, making it the least affordable housing since 30-year rates soared to nearly 5% in late 2018."

In general, the survey indicates that homes are less inexpensive today than they have been in the previous three years.

In a prior analysis earlier this year, Black Knight determined that the monthly mortgage payment on the average home purchase during the last 25 years required 23.6 percent of median household income (see graph below):

The payment-to-income ratio today is more inexpensive than it has been in the previous 25 years. In light of this, it's clear that American families today have the same ability to own a home as their parents did 20 years ago.

This backs up ATTOM Data's latest resource analysis, as Todd Teta, Chief Product and Technology Officer, explains:

"Despite rising prices, the typical median-priced home in the United States remains affordable to workers earning an average wage." The key reasons for this continue to be super-low interest rates and rising pay."

Conclusion

It's true that buying a home is more expensive today than it was a few years ago. However, it is more affordable to acquire now than it has been in the previous 25 years. To put it another way, homes are less affordable, but not unaffordable. That's a crucial distinction to make.