How affordability is defined and measured can affect which solutions are implemented. Measured one way, a particular solution may seem effective and beneficial, but measured another it may seem wasteful and harmful overall. Let me describe a specific example.

The latest International Housing Affordability Survey (IHAS) was released late January. It rates Vancouver the third most unaffordable city in the world, blames this entirely on the region’s urban containment policies, and so recommends more urban fringe development. The Survey is heavily promoted by its authors and widely reported by media, with little critical analysis. I analyzed its methods and recommendations, and recently released my findings in a new report, True Affordability: Critiquing the International Housing Affordability Survey. Let me share some highlights of my study and hope that you will read the full Critique for more details.

My overall conclusion is that the IHAS is propaganda, intended to support a pro-suburban political agenda rather than provide objective guidance. The IHAS’s analysis methods are biased and many of its recommendations are unsupported by research. The authors, Wendell Cox and Hugh Pavletich, are either very poor researchers or intentionally misrepresent key issue.

Experts recommend measuring affordability based on the portion of household budgets needed to purchase basic goods and services. Affordability was originally defined as households being able to spend up to 30% of their budgets on housing, but since households often make trade-offs between housing and transportation costs, experts now define affordability as households spending up to 45% of their budgets on housing and transport combined. This recognizes that a cheap house is not truly affordable if it has high transport costs, and households can rationally spend more for more accessible housing with more affordable transport.

The IHAS analysis methods have various structural problems which bias results:

The IHAS evaluates housing affordability using Median Multiples, which measure the ratio of median house prices to median household incomes. This only considers house purchase prices, ignoring other shelter costs such as maintenance, utilities and property taxes, and it ignores transportation costs. The costs the IHAS considers are smaller on average than the costs it ignores. Since detached, urban fringe housing tends to have higher maintenance, utility and transport costs, this exaggerates the affordability of urban expansion and underestimates the affordability of compact infill.

It overlooks or under-samples affordable housing types including secondary suites, rentals, subsidized housing, and condominiums. This exaggerates unaffordability where such housing is common.

It includes a limited set of regions. In some countries it includes both small and large cities, but in Asia it only includes large and expensive cities such as Hong Kong, Singapore and Tokyo. This exaggerates unaffordability in those countries.

It fails to account for factors that affect regional affordability such as population and economic growth, incomes and geographic constraints. This exaggerates unaffordability in attractive, economically successful and geographically constrained regions.

It measures entire regions, ignoring within-region affordability variations. Central neighborhoods are generally most affordable overall, considering total housing and transportation costs, and offer other benefits such as commute time savings and health benefits.

These biases make detached urban-fringe housing seem more affordable, and compact infill housing seem less affordable, than households actually experience.