Regardless of any competitive or status-based desires, income relative to your neighbours (everyone in your city) is a big part of actual purchasing power.

In most cities, housing prices are based on land value, not construction costs. And land value is entirely based on demand: what your neighbours are willing to pay for the same lot.

And most services are priced based on the salaries of your neighbours - the more you earn relative to them, the more of their time you can afford.