Amenity‐Based Housing Affordability Indexes

Abstract

The recent slump notwithstanding, substantial increases in house prices in many parts of the United States have served to highlight housing affordability for moderate-income households, especially in high-cost, supply-constrained coastal cities such as Boston. In this article, we develop a new measure of area affordability that characterizes the supply of housing that is affordable to different households in different locations of a metropolitan region. Key to our approach is the explicit recognition that the price/rent of a dwelling is affected by its location. Hence, we develop an affordability methodology that accounts for job accessibility, school quality and safety. This allows us to produce a menu of town-level indexes of adjusted housing affordability. The adjustments are based on obtaining implicit prices of these amenities from a hedonic price equation. We thus use data from a wide variety of sources to rank 141 towns in the greater Boston metropolitan area based on their adjusted affordability. Taking households earning 80% of area median income as an example, we find that consideration of town-level amenities leads to major changes relative to a typical assessment of affordability. Copyright (c) 2009 American Real Estate and Urban Economics Association.

Comparative analysis of MCDM methods for the assessment of sustainable housing affordability

“…Researchers suggest that the traditional way of defining and measuring housing affordability -the relationship between household's income and expenditure -is too limited [11][12][13]. Accordingly, in order to assist in achieve successful housing outcomes, there is a need to develop a more holistic housing affordability assessment tool that is better aligned with sustainability concerns and household wellbeing.…”

“…Despite these findings, research often continue to focus on economic criteria alone as the basis of housing affordability assessments [7][8][9][10], with little regard for what households get in return for what they spend on housing in terms of housing location and neighbourhood characteristics. There is a specified need for the criteria by which housing is judged as affordable to be refined [11].…”

Effects of Poverty on Urban Residents’ Living and Housing Conditions in Nigeria

“…A maximum of 30% of a household's gross income is universally established for housing affordability in US, UK and Canada (Fisher, Pollakowski, & Zabel, 2009;Kutty, 2005;Onu & Onu, 2012). When monthly housing costs surpass 30.35% of household's income, housing is considered not affordable.…”

House price appreciation and housing affordability: a study of younger households tenure choice in China

“…Household income as the main variables has been widely used in estimating housing affordability (Fisher, Pollakowski and Zabel 2009, Bogdon and Can 1997, Chaplin, et al 1994. Household total income is computed by average household size and per capita household income, which refers to all kinds of income for a family, which covers labour salary, self-employment, agricultural, industry and commerce revenue, cash income from assets, and transfer income (Rogers & Gray, 1994;Atkinson, & Brandolini, 2001;Hotz & Scholz, 2001;Yang & Wang, 2011).…”

“…However this definition does not consider liquidity constraints, household size, non-housing consumption and interest rates changes; neither ignore income inequality between the rich and the poor: for poor and extreme poor households they are not able to afford housing consumption no matter how little income be allocated to housing costs, on the contrary the rich always have surplus income even though they allocate half and more income on housing. Fisher et al (2009) introduced amenity factors to estimate housing affordability on the basis of ratio approach. Key to this view was the consideration that location factor would affect house price or rentals, thereby impacting housing expenditure to income ratio as consequences of job accessibility, school quality and safety, population density are subject to home locations.…”