Housing affordability is determine by normalizing median housing cost with the median household income. This way you get an index number that can be applied to different cities that with different median household costs and incomes.
The housing affordability index categories are as follows
- Severely unaffordable: 5.1 and over
- Seriously unaffordable : 4.1 to 5
- Moderately unaffordable: 3.1 to 4
- Affordable 3 and under
Affordability is a good indicator of a city’s livability. Where comparing only housing costs may show drastic differences between Vancouver and Ottawa affordability take median income into account when creating the index. This way the viewer can see that although housing may be cheaper in Ottawa he may be making less and therefore paying the same amount ratio of his income for housing.