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While affordable housing covers many different income levels and price ranges, what makes housing "affordable" is the rent or mortgage payment relative to the individual's or family's income. According to the federal government, rental housing is "affordable" if the people living there pay no more than 30 percent of their income for rent. According to mortgage lenders, a home is affordable if the mortgage payment is not more than 35 percent of the borrower's income. So, what's affordable depends on income.
In determining affordability relative to income, the term used by the affordable housing industry is called Area median income (AMI), which are calculated and published annually by the U.S. Department of Housing and Urban Development (HUD). “Median” means that half of all household in the area are estimated to have more than this amount of income.
Affordability is established by three main income tiers:
Very-low-income: 30% and below of AMI
Low- Income: 30%-50% of AMI
Moderate-Income: 50%-80% of AMI
Middle-Income: 80%-120% of AMI
In Charleston, Berkeley and Dorchester Counties, the Area Median Income for a family of four is $56,400. To qualify for an affordable housing project in which the income requirement is at or less than 50% of the AMI, than a family of four would have to earn $28,200 or less to qualify.
Subsidized housing
Like regular market-rate housing, virtually all of the affordable housing that is developed today is privately built and owned — either by non-profit organizations or private businesses and corporations. These organizations use a combination of pubic subsidies and bank loans to construct new homes and apartments that are affordable to low- and moderate-income families. In part because modern affordable housing contains a significant amount of private financing that comes with investor and lender oversight, the developments are professionally managed to ensure that the new housing retains its value and remains attractive and affordable.
Mixed-income housing
When housing developments contain both market-rate and affordable homes or apartments it's called mixed-income housing. Developers generally build mixed-income housing because they have received some kind of public subsidy. Less often state or local laws require developers to reserve a few new homes and apartments for low- and moderate-income households. Local inclusionary zoning/housing programs are commonly introduced for this purpose. Mixed-income developments help create affordable places to live in desirable areas where new affordable housing developments would not be economically feasible.
Senior housing
Because of the large number of low- and moderate-income seniors with fixed incomes, there are various public subsidy programs designated specifically for the construction of new apartments for the elderly. With a growing population of people age 65 and older, there is an increasing need for the development of new senior apartments.
Supportive housing
Supportive housing offers a place to live for individuals and families with special needs — including physical or mental disabilities. Supportive housing provides on-site services — such as healthcare, job training, and counseling — to help people live independently in their own apartments.
Entry-level home ownership
In high cost areas like Charleston, many low, moderate, and even middle-income families wishing to buy their first home are unable to find anything that is affordable. Most subsidy programs for home ownership offer financial assistance to individuals and families trying to buy a home. In addition, there are also a few programs to encourage developers to build new entry-level affordable homes.
Rent stabilized housing
To help keep older apartments affordable to families, many cities have rent stabilization ordinances that limit annual rent increases.
Public housing
From the 1930s until the 1970s, local public housing authorities built large public housing developments that were entirely financed by the federal government and owned by local housing authorities. Many of these projects fell victim to crime and disrepair as federal housing policy and funds shifted away from public housing. While a number of public housing complexes across the country have been demolished and replaced with privately built, owned and managed housing, a significant stock of public housing apartments continues to provide homes for extremely low-income families in the U.S.
Rental Assistance
The Section 8 Voucher program helps some low-income people with their monthly rent. Section 8 is funded by the federal government and administered by the local housing authority.
There are many reasons why homelessness is so pervasive in our local and national community, but the lack of affordable housing is the most significant. There is a sizeable gap between what it costs to build and operate housing and the incomes of people at the lower end of the economic spectrum.
Source: National Association of Home Builders
Sample occupations and incomes. People in a wide range of occupations need affordable housing. The following chart lists some of the types of workers whose families might need housing assistance.
CATEGORY |
SAMPLE OCCUPATIONS |
ANNUAL SALARY (family of four) |
||
Less than or equal to 30% of AMI (Very Low Income) |
home health aid worker, fast food cook, child care worker, cashier, maid/houskeeping |
Less than $16,900 |
||
31% - 50% of AMI (Very Low Income) |
Crossing guard, tax preparer, teacher, floral designer, vet assistant |
$16,901 - $28,200 |
||
51% - 60% of AMI (Low Income) |
loan counselor, social worker, fire fighter, travel agent, human resource assistant |
$28,201 - $33,800 |
||
61% - 80% of AMI (Low Income) |
court reporter, librarian, executive assistant, electrician, commercial driver |
$33,801 - $45,100 |
Fair Market Rent: Fair Market Rents (FMRs) are gross rent estimates; they include shelter rent and the cost of utilities, except telephone. The U.S. Department of Housing and Urban Development (HUD) sets FMRs to assure that a sufficient supply of rental housing is available to program participants.
An example of how Humanities Foundation rents compare to local Fair Market Rates in Charleston, Berkeley and Dorchester Counties.
# of Bedrooms |
Humanities Foundation |
Tri-County Fair Market Rates |
1 |
$439 - $495 |
$586 |
2 |
$445 - $595 |
$663 |
3 |
$624 |
$864 |
Gentrification is the displacement of a low- to moderate-income neighborhood population by a higher-income population. Some of the effects of gentrification are:
Increased property values: According to the National Association of Realtors, the median sales price of single-family homes increased 36 percent between 1989 and 2000.
Loss of core businesses and community services: Businesses, schools, and churches designed to serve low- and moderate-income families are turned out of these neighborhoods as the population that supports them moves away.
Reduction of affordable housing: Low- to moderate-income people are forced to look further outside of the city for a home they can afford. Lack of support for affordable housing development: The new higher income property owners do not want affordable housing developed in their neighborhoods.
The net effect is a significant loss of affordable housing for very low- to moderate-income individuals who have to look further and further outside of the city for a home or apartment they can afford.
