Affordable housing
The general accepted definition of affordable housing in the US is housing that costs 30% of the household’s income or less. Thus, affordability depends entirely on your income and the price of homes. As one’s income goes up, more and more homes become affordable and as one’s income goes down less and less homes become affordable. Likewise, as the price of a home goes up, it becomes affordable to less and less people. Thus, the people that are at most risk of not being to find affordable housing are those of lower income especially those of lower income in places where housing costs are high.
In today’s economy, lots of people have either lost their jobs entirely or have had their income’s reduced. They were once living in houses that they could afford and now cannot. This means that there is a higher demand for affordable housing than there was previously. Higher demand for something makes the price of that something go up. This is a vicious cycle. As more people need the option of homes in a lower price range, the more competitive that market will become, making the prices go up and once again making the homes unaffordable. If solutions to make more affordable housing available aren’t implemented, people are forced either to live in unaffordable situations that can cause them to go into irrecoverable debt or cause them to shirk on costs such as health care, food, or clothing. In the worst case scenario, they are going to be homeless. Right now, according to Wikipedia, 20% of people household’s in the US are living in unaffordable housing and more people aren’t living in housing at all. This means that 1 in 5 people need help.
One way to make more affordable housing available is to build more homes in that lower price range. The more homes there are, there will be less competition in that market, thus keeping the homes in the affordable range. Often the cost of materials and labor that go into making home add up to more than a person’s 30% income level even when split to be paid off over many years. This is where programs like Habitat for Humanity come in. They help families build their own homes by providing the initial cost of materials and guidance along with a bit of labor (the families have to help with a lot of the labor too). Then, after the home is completed, the families pay off the cost of materials over several years back to Habitat which uses the money to help build more homes.
Why is Affordable Housing important to me?
While on a recent mission trip to the Dominican Republic I saw the substandard housing conditions that so many people living there experienced. It opened my eyes to the fact that such poverty existed elsewhere. When I made my return to the U.S. I really started to look around me, at the houses I walked past every day on my way to work or class, or my weekly drives to the grocery store. I suddenly realized that this problem of inadequate housing extended into my own city, within blocks of where I live.
As a college student who also works part time I made an agreement with my parents. I could live off campus if I was able to handle paying my rent/utilities & groceries. Granted I only work part time but by the time I pay rent & utilities each month I have just enough to cover groceries & a few extras. Even if I were to double my hours at work, where I make above minimum wage, to live in my current house I would have to pay substantially more than 30% of my income. This made me think, if I, at 21 years old, can have just enough money to pay rent, how might someone my age, with no college education, and perhaps a dependent sibling or child struggle to provide housing, food, and other necessities.
I'm excited at the prospect of helping the affordable housing cause. The quest for affordable housing does not just stop in Pittsburgh. The problem is everywhere.
Official Snapshot from B&B
What is affordable housing?
- The Department of Housing and Urban Development (HUD) considers housing to be affordable to a low-income family as long as the cost of housing, including rent or mortgage/tax payments plus basic utilities minus telephone and internet service, does not exceed 30% (before taxes).
- In 2001, 4.8 million low to moderate income working families spent more than ½ of their income on housing. By 2010, this number had jumped to 9.5 million – just shy of doubling in just 9 years. Over time people are not making enough each year to keep pace with rising living costs. [1]
How much does a household have to make annually to qualify as low income?
Low-income is defined as a household whose annual income does not exceed 80% of the median income for the area, as determined by HUD. Other factors are considered on a regional basis where there may be great disparity between the wages earned by high and low income families.
- As one example, in 2006 New York City’s median household income in the wealthiest census tract was $351,333, while in the poorest it was $8,885. [2]
- The median monthly rent for unsubsidized housing in NYC increased from $1,000 in 2006 to $1,220 in 2010 (in constant dollars). [3] $1,220 a month implies (using the 30% rule) an individual would have to make $48,800 a year (before taxes). Minimum wage in New York State is $7.25 / hr, which translates to a generous $15,080 a year. [4]
Housing problems can be broken down into the following areas:
- Cost burdens: residents pay an excessively large percentage of income on housing costs. The total number of all renters in 2009 experiencing a housing cost burden (using 30% rule) increased to 18.5 million from 17.4 million in 2008. An additional 14.3 million households spend over 50 percent.
- Physical inadequacy: Lack of hot water, electricity, toilets, bathtubs, and showers are examples of severe physical deficiencies. Unsafe stairs, ramps, and roofs account for just some of the structural dangers families live with. One in seven poor families lives in housing which is physically dangerous or inadequate.
- Overcrowding: the number of people living in the house is greater than the total number of rooms in the house. Notoriously difficult to track and log. About 6.1 million households live in overcrowded conditions.
Big picture problems
- The National Minimum Wage is Too Low
- Despite states’ efforts, there is no county in the country where an individual can work 40 hours per week at the minimum wage and afford even a one-bedroom apartment at the local fair market value. [5]
- There Is Not Enough Affordable Housing
- Lack of affordable housing compounds many other problems for low-income families
Solutions already in place
From the government,
- public housing
- building incentives and subsidies
- rent subsidies
- building grants
From NGOs (Non-governmental Organizations),
- Habitat for Humanity
- Rebuilding Together
Common False Myth
Affordable housing projects lower surrounding property values and attract higher rates of crime to the neighborhood. Fact: Studies show that new affordable housing developments improve property values, the property tax base, and residential sales prices in surrounding neighborhoods. The vast majority of affordable housing projects created today blend in with the surrounding neighborhoods: matching pre-existing architectural styles and using climate appropriate construction for the region. *Information from Habitat for Humanity International www.habitat.org
