affordable housing

In the United States, the term affordable housing is used to describe housing, both rental homes and owner-occupied, that is affordable no matter what one’s income is. The U.S. government regards housing costs at or below 30% of one’s income to be affordable.

Costs for mortgage, utility, taxes, interest, and insurance should be no more than 38% of one’s gross monthly income for housing ownership to be considered affordable. So, issues of housing affordability are a matter of comparing the costs of available housing in an area with the incomes of the population of that area. Good housing policy would produce housing priced in the range of affordability for the area population.

Generally, the housing needs of upper income levels are met by market factors. Building homes for affluent families can be very profitable. Affordable housing programs are needed to assure that “low” or “very low” income individuals and families have a place to live. According to the U.S. Department of Housing and Urban Development (HUD), low income persons earn less than 80% of an area’s median income. Very low income persons earn 50% or less of an area’s median income.

More people than you might realize. The economic expansion of the 1990s obscured certain trends and statistics that point to an increased, not decreased, need for affordable housing. Families who pay more than 30 percent of their income for housing are considered cost burdened. These families may have difficulty affording necessities such as food, clothing, transportation, and medical care. An estimated 12 million renter and homeowner households now pay more than 50 percent of their annual incomes for housing.

The simple truth is family with one full-time worker earning the minimum wage cannot afford the local fair-market rent for a two-bedroom apartment anywhere in the United States.

The lack of affordable housing is a significant hardship for low-income households preventing people from meeting their other basic needs, such as nutrition and healthcare, or saving for their future and that of their families.

People who need affordable housing often cannot voice their support for more housing because they fear stigmatization or do not have the time to support housing developments. They need the vocal support of friends, neighbors, organizations, and other members of the community to ensure that housing remains affordable.

Everyone deserves affordable housing. However, as the cost of housing rises, many of us are forced to pay more than we can really afford. And even if you and your family have a home you afford, others do not. People you rely on all the time – teachers, bank tellers, police officers, waiters, fast food clerks, dry cleaner employees, secretaries, nurses, firefighters, and even many young professionals – may need assistance with housing. Someone we know – a relative or friend – or perhaps you yourself may be impacted by the scarcity or cost of housing. Rising housing costs are a concern for everyone for the following reasons:

Economic Reasons

• Over the last 10 years, the largest job growth occurred in the service and retail trade sectors. Service, retail trade, and agriculture jobs on average pay much lower than other job sectors.
• Over the last 10 years, housing costs have significantly outpaced the increase in wages.
• Companies in the area rely on a mix of workers earning different levels of income. Without these workers, the companies could not afford to operate and would have to move elsewhere.
• People who cannot afford local housing costs are forced to commute from outlying communities which (1) exacerbates traffic congestion and air quality problem due to long commutes; (2) decreases dollars spent in on goods, services and entertainment; and (3) increases absences and decreases work productivity.

Social Reasons

• Approximately 14% of all owners have incomes less than 80% of the median and pay over 30% of income for housing costs.
• Approximately 39% of all renters have incomes less than 50% of the median and pay over 30% of income for housing costs.
• All families need affordable housing for a stable household environment.
• Stable households provide stable children in schools and families in neighborhoods, a stable quality of life and stable demand for goods and services which drives the economy.

People usually raise a variety of concerns if they oppose new low-income housing developments. With an Affordable Housing development, there are likely to be multiple hurdles ranging from lack of enthusiasm to “Not In My Back Yard” (NIMBY) attitudes. These concerns are generally unfounded.

Today’s low-income housing is well-maintained, attractive, and safe for residents and neighbors. A number of studies conducted by housing experts confirm this statement. The following are some issues to consider:

• Property values: Factors such as neighborhood desirability, characteristics of particular housing units being sold, the overall area development, and prosperity has more to do with property values than a single affordable housing development. Contemporary affordable housing is attractively designed, professionally managed, and well-maintained. For these reasons it preserves its good appearance, usefulness and its value over time, and does not reduce the desirability of the surrounding area. Much of affordable housing is indistinguishable from market rate housing.
• Crime: Many of the affordable housing providers in the area carefully screen prospective tenants for criminal behavior. Much of the affordable housing developed today is managed carefully to reduce incidence of crime. It often helps reduce slum conditions by replacing deteriorated housing in concentrated areas.
• Traffic: Affordable housing developments are reviewed for traffic impacts exactly the same way as market rate housing. Studies show that potential residents of affordable housing developments own fewer cars and drive less than those in the surrounding neighborhood.
• Density: Affordable housing developments reduce overcrowded conditions by helping more people to live in attractive housing. Unlike overcrowded housing, higher density housing is designed to support more people by including amenities into developments.

Low Income Housing Tax Credits (LIHTC) is a Federal housing assistance program that provides tax incentives to owners of affordable housing. The program does not provide direct assistance to renters and is strictly used to finance the construction (not the operation) of rental properties. Usually, LIHTC properties have units available for families earning 60% or less of the Area Median Income (AMI). The rental properties are usually of very high quality and are often mistaken for luxury apartment communities. LIHTC is America’s most successful affordable housing program having created millions of affordable rental units since its inception in the late 1980’s.

Subsidized housing rental payments are reduced as a result of assistance provided by government, private enterprises, or individuals. Tenants pay less than the market rate for rent or for rent and services. Affordable Housing is generally defined as housing which the occupant is paying no more than 30 percent of gross income for housing costs, as defined by the US Department of Housing and Urban Development (HUD). Affordable housing provides residents with low cost housing for sale or rent. This form of housing is often provided by a housing agency to meet the needs of local people who cannot afford accommodations through the open or low-cost market, or subsidized housing.