Why Housing Affordability is More Complicated Than You Think

by Peter Thomas Ricci

You may think you understand housing affordability, but chances are you’re relying on limited measurements.


How affordable is Houston’s housing market? The answer to that question is more complicated than meets the eye, and it suggests some very interesting things on how we assess affordability.

Firstly, there is the NAHB’s Housing Opportunity Index, which compared median income and median price in an area and assigns an index reading to that area. Houston, through the fourth quarter of 2014, had an index reading of 66.6, which is very good for being such a large, high-profile city (Los Angeles, by contrast, had a reading of 16.2).

Things get vastly more complicated, though, when we consider the complementary costs that also impact an area’s affordability. As a Center For Housing Policy study found, once transportation costs are added into the mix, the affordability situation changes substantially; suddenly, Houston is less affordable than Chicago, Boston, New York and even San Francisco – areas that, in NAHB’s index, it was easily more affordable than.

Take a look at our infographic below for more detailed numbers:

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