Affordability index

Affordability index,

Definition of Affordability index:

  1. A measurement of housing affordability compiled by the National Association of Realtors. The intent of the affordability index is to measure the ability of area residents to buy homes in that area.

  2. An affordability index is most often associated with housing costs. Housing affordability indexes often compare the cost of purchasing a home in different locations. Points above 100 indicate that a typical family may struggle to qualify for a mortgage on a home in the area, while a value of 100 indicates that the typical family has more than enough money to qualify. As housing is often one of the largest expenses a family faces, a housing affordability index is seen as an overall indication of the costs of living in that area. However, there are more detailed indexes that can be used between areas that have nearly equivalent housing affordability index readings. A cost of living index goes far deeper than housing, instead taking a basket of goods and service costs to allow for comparison on a city-by-city basis.

  3. An affordability index is a measure of an average person's ability to purchase a particular item, such as a house, in a particular region. An affordability index uses the value of 100 to represent the position of someone earning a population's median income, with values above 100 indicating that an item is less likely to be affordable and values below 100 indicating that an item is more affordable.

How to use Affordability index in a sentence?

  1. Affordability indexes measure a person's ability to afford an item, assuming they are earning the median family income for their country or region.
  2. The most common affordability indexes focus on housing as this is seen as a proxy for the overall costs for living in an area.
  3. Cost of living indexes are affordability indexes with a wider range of data points to allow for deeper comparisons when housing affordability is nearly even.

Meaning of Affordability index & Affordability index Definition