I personally feel that analyzing the cost to rent vs the cost to buy, both short and long term, is the best fundamental way to view the RE market.

Using percent income or monthly expenditure calculations brings far too many variables into the equation and are based on the assumption that every person places a similar value/percentage on the property that they sleep in on a regular basis. Some people might place a higher or lower premium on this, depending on a number of variables.

Would you recommend the same for purchasing a vehicle? Some might find the need to spend a bit more (or less) on their vehicles for various reasons. The same goes for any other personal asset (retirement, life insurance, etc.). Why would purchasing a home be any different?

Renting and owning a home, on the other hand, are the only two competitors when it comes to a home. It is reasonable to expect that these two competitors would fall under the forces of supply and demand, and would compete against each other for customers.