A measure of how affordable housing is for a typical household in a given market. Various organizations calculate it differently, but it generally compares median household income to the income needed to carry the mortgage on a median-priced home. RBC's Housing Affordability Index, for example, measures the percentage of income needed to cover homeownership costs.
Why It Matters
Affordability indices put cold, hard numbers on the question everyone's asking: can people actually afford to live here? When affordability worsens, it affects everything from first-time buyer activity to rental demand to government policy. It's the context behind the price numbers.
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