
These days, the affordability of housing is defined in many places by the market value of the housing. For example, one range of housing cost, based on local markets, is deemed ‘somewhat affordable,’ another range of cost, perhaps ‘moderately affordable,’ and so on.
But housing prices are rising, both for rental and for purchase. Rents and mortgage payments climb higher. Unless local income increases to match these housing cost increases, the differing slices of ‘affordability’ as measured by housing cost climb away from the ability to pay for rent or mortgages.
Virtually everywhere, income is not rising to offset increases housing value. Currently, salaries are flat, or rising more slowly than housing costs.
One obvious solution is to measure affordability by what people have to spend on housing, not its market value.
Hats off then to the West Midlands Combined Authority in the UK, the first to define affordability based on local incomes, rather than market values. Read more in Property Wire: The West Midlands Redefines ‘Affordable Housing’