# Housing Affordability

*Real Estate — Finicade finance glossary*

Housing affordability compares prices or rents to local incomes — as a price-to-income multiple, or the share of income spent on housing.

Housing affordability compares house prices or rents to local incomes, most simply as a price-to-income multiple or the share of income spent on housing — with 30% the conventional threshold for cost burden. Affordability depends on three moving parts at once: prices, incomes and interest rates, which is why a period of flat prices and rising rates can worsen affordability sharply.

**Formula:** `Price-to-income ratio = Median house price ÷ Median household income`

**Also known as:** affordability index, price to income ratio, housing crisis

**Related terms:** [Zoning](https://finicade.com/glossary/zoning), [Cost of Living](https://finicade.com/glossary/cost-of-living), [Mortgage](https://finicade.com/glossary/mortgage), [Median Income](https://finicade.com/glossary/median-income), [Rent Control](https://finicade.com/glossary/rent-control)

Source: https://finicade.com/glossary/housing-affordability