Affordable Housing, Housing Policy Briefs, Reports and Publications

New Harvard JCHS Report Analyzes 30 Percent Standard vs. Residual Income

Joint Center for Housing Studies of Harvard University
 

Earlier this fall, the Joint Center for Housing Studies of Harvard University (JCHS) released a new report, Measuring Housing Affordability: Assessing the 30 Percent of Income Standard. The report explores the residual income standard as an alternative measure to the 30 percent of income standard to assess affordability of housing.

The widely-used 30 percent standard measures a household’s ability to afford housing costs that do not exceed 30 percent of the household’s income. Critics of the 30 percent standard note that a fixed fraction of income does not consider varying non-housing expenses and overestimates the housing burden of high-income households. Alternatively, the residual income standard subtracts a household’s minimum non-housing spending needs from the household’s income, the money left over is the residual income.

The researchers conclude that the 30 percent of income standard and residual income analysis are comparable in aggregate when measuring housing cost burdens.

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