Analyzing Measurements of Housing Affordability

Abstract

Measuring housing affordability is a key challenge for most communities. Traditionally, the 30 percent rent-income ratio has been the cornerstone of housing affordability policies. Recently, however, a number of researchers have recommended new affordability measures. Given the complexity of determining realistic housing affordability, identifying the best and most appropriate measure is a challenge. This thesis is the first research attempt to develop a comprehensive methodological framework for the comparative assessment of commonly used housing affordability indicators. Six housing affordability measures were selected for analysis: NAR Housing Affordability Index, HUD Guideline, Amenity-Based Housing Affordability Index, H+T Affordability Index, Shelter Poverty Measure, and Self-Sufficiency Standard. These measures were compared in terms of their underlying standards, data accuracy, and comprehensiveness. Specific indicators for each of the three components were developed and applied to the six housing affordability indicators. Detailed analysis of the collected data revealed that the Self-Sufficiency Standard measure is the best measure of housing affordability among the six indicators analyzed. This measure outranks each of the other measures on all three dimensions of comparison. Therefore, it is recommended that local planners, stakeholders, and policymakers adopt the Self-Sufficiency Standard to assess housing affordability outcomes.