There are many rules of thumb, and the FHFA has new suggestions for making those more accurate.
Housing industry leaders like the National Association of Realtors (NAR) and the federal Department of Housing and Urban Development (HUD) have indexes that they use to monitor affordability trends across the country. Staffers at the Federal Housing Finance Agency (FHFA) recently laid out some new ideas on measuring affordability that build on these existing practices. With a couple key improvements, FHFA believes we can get a more accurate understanding of what housing options are available to those making less than the median income.
Currently, the indexes used by industry leaders look at housing that’s available at price points a typical family can afford. The profile of that “typical” family is developed using averages. So we don’t always get an accurate picture of what’s available to families on either end of the income scale.
FHFA’s new index breaks down affordability by income-level, which allows us to see how much housing is available for people in a variety of income brackets. This is especially important for families earning less than the median income.
The report confirms what Habitat Wake already knew -- there’s way less housing available for people at the lower end of the income spectrum than those earning median income and above.
According to the article, “Over the last 12 years, affordability has more than doubled for median-income households by mid-2018, while affordability remained largely unchanged for low- and very-low-income households.”
The new index will help keep an eye on those trends. It also includes factors that impact affordability after a family has already moved into a home, such as a rise in property taxes and insurance costs. These factors are not commonly considered when calculating housing affordability but are critical to a family’s ability to stay in their home.
House prices and availability vary from location to location. Wake County is often rated among the top places to live and our community is growing by more than 60 people per day! It’s crucial for local policymakers to take affordability data, like that provided by FHFA, into consideration when making policy decisions about housing.
Topics: