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New Home Affordability, Equity, and Housing Market Behavior

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  • John C. Weicher

Abstract

Recent analyses have reported quite different estimates of the percentage of American families who can afford to buy new homes. However, the differences in the levels of affordability have obscured two more important similarities between the studies: most measures of affordability are closely correlated over time, and none correlate at all with what in fact is occurring in the housing market. One important reason for the latter phenomenon is that affordability measures concentrate on income and ignore wealth. Newly available data from the Annual Housing Survey makes it possible to estimate the equity of current homeowners, which is one important component of wealth. With this data, it is possible to compute a new measure of affordability, which more closely corresponds to the actual market behavior of households. This new measure shows a much higher level of affordability than those previously published, and also shows that young families, who have been the subject of particular concern among housing policy‐makers, appear to be slightly better off in the housing market than older families.

Suggested Citation

  • John C. Weicher, 1978. "New Home Affordability, Equity, and Housing Market Behavior," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 6(4), pages 395-416, December.
    • Handle: RePEc:bla:reesec:v:6:y:1978:i:4:p:395-416
    DOI: 10.1111/1540-6229.00188
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    Cited by:

    1. Patric H. Hendershott & Thomas G. Thibodeau & Halbert C. Smith, 2009. "Evolution of the American Real Estate and Urban Economics Association1," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(4), pages 559-598, December.
    2. Peter Neuteboom & Dirk Brounen, 2011. "Assessing the Accessibility of the Homeownership Market," Urban Studies, Urban Studies Journal Limited, vol. 48(11), pages 2231-2248, August.
    3. Dowell Myers, 1981. "Housing progress in the seventies: New indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 9(1), pages 35-60, March.
    4. John C. Weicher, 1984. "Housing And Housing Finance In An Era Of Inflation And Disinflation: Introduction," Contemporary Economic Policy, Western Economic Association International, vol. 2(6), pages 1-4, May.

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