Household Income and Wealth
Income is the primary factor— not price and availability, that determines housing affordability. In a market economy the distribution of income is the key determinant of the quantity and quality of housing obtained. Therefore in order to understand challenges of making housing affordable, it is essential to understand trends and disparities in income and wealth. Housing is often the single biggest expenditure of low and middle income families. For low and middle income families, their house is also the greatest source of wealth.
The most common approach to measure the affordability of housing has been to consider the percentage of income that a household spends on housing expenditures. Another method of studying affordability looks at the regular hourly wage of full-time workers who are paid only the minimum wage (as set by their local, regional, or national government). The hope is that a full-time worker will be able to afford at least a small apartment in the area that he or she works in. Some countries look at those living in relative poverty, which is usually defined as making less than 60% of the median household income. In their policy reports, they consider the presence or absence of housing for people making 60% of the median income.
Read more about this topic: Affordable Housing
Famous quotes containing the words household, income and/or wealth:
“Then, though I prize my friends, I cannot afford to talk with them and study their visions, lest I lose my own. It would indeed give me a certain household joy to quit this lofty seeking, this spiritual astronomy, or search of stars, and come down to warm sympathies with you; but then I know well I shall mourn always the vanishing of my mighty gods.”
—Ralph Waldo Emerson (1803–1882)
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—Bible: Hebrew, Proverbs 3:13-18.
“The Landlord is a gentleman ... who does not earn his wealth. He has a host of agents and clerks that receive for him. He does not even take the trouble to spend his wealth. He has a host of people around him to do the actual spending. He never sees it until he comes to enjoy it. His sole function, his chief pride, is the stately consumption of wealth produced by others.”
—David Lloyd George (1863–1945)