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What is "affordable housing"?

There is no single definition of affordable housing. What is considered "affordable" by a family earning $100,000 a year will likely be out of reach for another family that earns only $25,000 a year. Incomes and housing costs also vary by location. A typical home in one community might cost $300,000, while that same house would cost half as much in another part of the country.

Rules of thumb often are used to determine affordability. For example, the federal government considers housing to be affordable if a family spends no more than 30 percent of its income on its housing costs, including utilities. Using this benchmark, a family earning $30,000 a year could afford to pay up to $9,000 a year (or $750 a month) on housing. In the private sector, lenders underwriting home purchases typically require that families spend no more than some set percentage of income (such as 28 percent) for mortgage payments, taxes and insurance.
Yet, these "rules" don’t tell the whole story. A family making $200,000 per year can afford to spend 30 percent of its income on housing and have enough left over to meet other necessities, but a family making $20,000 might not be able to make ends meet on the income left over after spending 30 percent for housing. A family’s capacity to meet other expenses depends on other factors such as family size and age of children.

To learn more 
about the difficult trade-offs that families face when housing is unaffordable, see the Center for Housing Policy's report, Something's Gotta Give [PDF].
Gates of Ballston
Gates of Ballston, Arlington VA -- photo courtesy of AHC Inc.

Ultimately, families of all incomes need affordable homes – homes that are decent and accessible to jobs, shopping and other services, and available at a cost that allows them to provide for life's other necessities, such as food, clothing or medical care.
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What is "subsidized" housing?

Most housing – affordable or otherwise – is provided by the private market place. That is, developers, homebuilders or landlords compete to sell or rent units to potential home buyers or tenants. Some households, however – particularly lower-income households – are at a great disadvantage when it comes to renting or buying market-rate homes. They may have to pay excessive portions of their income, crowd in with other families to pool resources, or live in substandard conditions. That is why various government programs have been created to help people obtain decent, affordable homes.

Subsidized housing is housing that is made available at below-market rates through the use of government subsidies. Unlike other government support programs, such as food stamps or Medicaid, housing subsidies are not an entitlement and are generally in short supply. Many communities have long waiting lists for housing assistance.

Click here to learn more about housing subsidy programs.
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Who is eligible to live in subsidized housing?

To live in a home funded by a federal housing subsidy, an applicant must qualify by income. The yardstick the government uses to measure income eligibility for housing assistance is the median income for the area, known as the area median income or AMI. For the largest federal rental assistance programs – specifically, Housing Choice Vouchers, public housing, and project-based Section 8 – federal law limits eligibility to households with incomes at or below 80 percent of AMI. Other federal rental assistance programs are limited to families with incomes at or below 60 percent of AMI (Low-Income Housing Tax Credit) or 50 percent of AMI (supportive housing for the elderly and disabled). Direct federal subsidies for homeownership are generally limited to families with incomes at or below 80 percent of the area median income, though reduced-cost mortgage programs reach families with somewhat higher incomes.

6 North
Photo courtesy of McCormack Baron Salazar
Because there are many more eligible families than resources available to serve them, two other factors come into play in selecting families for admission to federally subsidized housing. The first is "income targeting" – a rule that directs a certain percentage of new admissions to families with incomes below 30 percent of the area median income. This rule is intended to ensure that families with the most severe housing needs are prioritized for scarce rental subsidies.

The second factor is local admissions criteria which allows public housing agencies and private owners of assisted housing to admit families based on other criteria (e.g., priority to homeless families, the elderly, or selection by lottery). Click here to leave this site and access a chart providing more detailed
information on income eligibility, income targeting, and rents for federal rental assistance programs.

When state and local housing programs use federal funding, they are subject to federal rules. When using only state or local funds for housing, however, they are not subject to these rules. As housing challenges have grown among moderate-income families, a number of states and localities have decided to use purely state or local funding to meet the needs of these families. States and localities are also using policy tools other than direct subsidies – such as innovative zoning policies, tax abatements, and the use of publicly owned land – to meet the housing needs of these families.
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What is "workforce housing"?

As one observer put it, "housing is where the jobs go home to sleep at night." Workforce housing is housing for the occupations needed in every community, including teachers, nurses, police officers, fire fighters and many other critical workers. In many communities, there is a mismatch between where these jobs are located and where affordable homes are located – a difficult situation for both working households and employers. Many working families must choose between paying exorbitant housing costs to live close to their jobs or enduring lengthy commutes from areas with more affordable housing. In areas with particularly high housing costs, employers may have difficulty retaining employees because the workers do not make enough to afford nearby homes and tire of long commutes.

Workforce housing also is an issue of equity. People who provide the bulk of essential services in their communities – teachers, police officers, fire fighters, hospital workers, laundry and restaurant workers – often cannot afford to live in the communities they serve. The lack of affordable workforce housing is felt beyond working families, however. High housing costs force families to move further and further from their place of work to afford housing. Cities become ever more sprawling, leading to increases in traffic congestion, air pollution, and road maintenance costs that negatively affect the quality of life for all residents in the community.

The families in need of workforce housing don't fall neatly into a single narrow income category. Employees in some industries (e.g. retail sales, food service, tourism) are likely to be in the lower income ranges. Seasoned workforce jobs with education or training requirements, such as teachers, police officers, nurses, etc., may fall into the middle income brackets but still find it difficult to afford homes in the community where they work.

To address these issues, a growing number of employers, states and localities are developing "workforce housing" programs to bring housing within reach of working families. These programs utilize many of the tools described in the Toolbox section of this site.

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