Fisher Center for Real Estate and Urban Economics

The decline in home prices in the Great Recession and the lack of recovery in prices in the early years of recovery have created a significant improvement in some types of housing affordability measures. Yet incomes also dropped, and rent levels often moved in the opposite direction to home prices, showing that improvements in affordability were far from universal. This paper uses aggregate statistics available from a variety of public and private sources to illustrate different types of affordability indicators, examines how these changed for the US, California, and California regions, during the recession and recovery, and discusses implications for housing policy as the economy recovers. The analysis shows that the experience in the Great Recession and following was very different for homeowners and renters, as well as between homeowners with a mortgage and those without a mortgage. Furthermore, comparisons among different geographic locations, income groups and affordability measures show the importance of context in defining affordability as a problem and in creating policies in response.