October 18, 2018, by Erik Larson

Analyzing Housing Affordability

Who can afford housing in your community?

A recent Harvard housing study confirmed what many of us live and experience every day in our communities, that our housing supply is not meeting the demand of our community.

Specifically, housing at the lower end of the price range is in short supply while prices for these homes soar. The situation is even worse for renters, with rents growing at more than ten times the rate of median incomes in the renting population.

One of our clients here at eImpact recently asked us to analyze housing and income data for the city, and we thought this analysis might be interesting to others out there. Below I outline some of the findings, with identifiers to the specific community removed.

If you think this type of analysis would be helpful in your community, please feel free to drop me an email at erik@eimpact.report.

The Analysis

Our Approach

At the direction of our client, to whom we owe credit for this creative approach, we pulled data on Area Median Income (AMI) and created several brackets ranging from 40% to 140% of AMI. Next, we sourced housing stock data from a range of sources including Freddie and Fannie Mae, Census and Zillow. Lastly, we calculated how much house a person or household could afford based on AMI bracket without exceeding a Loan-To-Income ratio of 36%.

Summary Results

The results of this simple calculation are summarized in the chart below. Though this is a straightforward and fairly rudimentary analysis, it is amazing how many cities don't have a grasp on these same numbers. This raises an interesting question of how to debate housing policy without the underlying numbers?

The chart below shows the number of housing units available (y axis) by AMI bracket (x axis)

In addition to this summary chart we analyzed:

  • - Percent Owned vs. Rented
  • - Pricing Breakdowns
  • - Multi-family Housing Stock
  • - Industry Average Pay and Growth Rate

Moving Forward

Our client intends to use this chart, along with other data eImpact has compiled on the local economy and community profile, to engage residents and city council and move the housing policy conversation forward. The data won't fix the housing issue (in some places, crisis), but it is an essential starting point.

Interested in exploring housing data in your community?

Set up a time with a data expert.