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Affordable HousingAffordable housing is a relative term and often used to describe the housing costs to a group of people within a specified income range. It applies to both the concepts of buying a house and renting a house.A house is affordabe if its renting cost does not exceed 25% of a household's gross income and its buying cost mortgage does not exceed 35% of a household's gross income. When the monthly carrying costs of a home exceed these numbers, then the housing is considered as unaffordable. Housing affordability somehow depends on supply and demand. Usually, an area or a neighbourhood which has more supply than demand will have affordable price. Where the supply of available housing is less than the demand then the prices will be unaffordable. 'Affordability' is a very relative term. For some people a house can be affordable and for some other people the same house may not be affordable. If the cost of house doesnt exceeed 3 times of the annual household income than the house is considered to be affordable. It is usually applicable to homebuyers and not current owners or residents. These are different factors which determine affordability: 1) Annual income of buyer 2) Overall stability of the buyer 2) The price of the house 3) Percentage of mortgage to purchase the house 4) Interest rate on the mortgage. |
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