FHFA debuts new housing affordability metric

30 Nov 2018


New study found that there are differing levels of affordability for certain groups of individuals

In a newly released working paper, staffers at the Federal Housing Finance Agency debuted a new housing affordability metric that builds upon the data already provided by other similar metrics. And what the data reveals on the metric’s maiden voyage isn’t pretty.

In the working paper detailing the new measure, the authors lays out how the new Housing Affordability Estimates improve upon established housing affordability indices like National Association of Realtors’ Housing Affordability Index.

According to the paper, the new index increases accuracy by including a detailed breakdown of affordability by income-level; the use of real data on income, debt and funds available for down payments; and the incorporation of a future looking component that factors in things that impact affordability after origination like changes to property taxes and insurance all of which yield an index with more granular insight on the state of national affordability.

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