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The Housing Affordability Index (HAI) is a single, reliable measure of housing affordability for all consumers (households) of the typical housing unit. The HAI is the percent of the median household income required to occupy the median housing unit including both sold and rental housing. The ratio of the median cost for sold housing to median household income and the ratio of the median cost for rented housing to median household income are each calculated and weighted by their respective shares of the housing market (percent owners and percent renters). The sum of the two weighted ratios results in the overall housing affordability index.
The Overall Housing Affordability Index answers the question, “What is the percent of the typical household income that is required to afford the typical home?”
As a single, summary measure of housing affordability for the median household income, the HAI is based on two housing cost components for the period reported. The sold component of the overall HAI measures the percent of the median household income required for the Principal, Interest, Taxes, and Homeowner’s Insurance (PITI) payment for the median unit sold. The rental component of the overall HAI measures the percent of the median household income required for the gross rent, including utilities, for the median unit rented.
The sold component of the HAI answers the question, “What is the percent of the typical household income that is required to afford the typical bought home?”
The rent component of the HAI answers the question, “What is the percent of the typical household income that is required to afford the typical rented home?”
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