What is Affordable Housing?
Blog, April 2021
What is Affordable Housing?
At a very general level, Affordable Housing means that you can afford your rent or mortgage payment AND have money left for your basic needs. That’s pretty broad. So what is affordable housing? More narrowly, affordable housing is defined as housing that is affordable to people making the area median income (AMI) or less as outlined by national or local government indexes. The simple formula we use at GROWTH is that housing—rent or a mortgage payment—should not cost more than 30% of your gross household income. That means the remaining 70% of your income can go toward food, clothing, utilities, transportation, and other necessities. We believe spending more than 30% of your income on housing expenses is a burden.
In a broad sense, the term “affordable housing” refers to an entire industry with hundreds of programs designed to make housing more affordable from rental to for-sale housing and in rural, suburban, and urban communities. And it comes in all shapes and sizes from townhomes to single-family homes to multi-family apartments. Affordable housing can be designated for seniors, people with disabilities, and supportive housing. However, when people hear the term “affordable housing” they most often think of Section 8 housing, one of many subsidy programs available to help with rent payments. But did you know that rental assistance also comes in the form of assisting with security deposits, utilities, and even relocation expenses?
And there are countless other programs including assistance for individuals and families interested in homeownership. For example, did you know that your mortgage interest deduction is a federal program that makes owning a home more attractive and more affordable? Millions of Americans take advantage of this benefit every year to ease the cost of owning a home. Did you know that many Housing Finance Agencies provide first-time buyer programs that offer down payment assistance or reduced interest rates? Saving for a down payment remains the number one obstacle to purchasing a home. And did you know that there are programs for veterans, first responders, teachers, nurses, and police officers that help with closing costs? These out-of-pocket expenses, which include closing costs, are just one more barrier for many when purchasing a home. Additionally, there are countless housing agencies and non-profit organizations that provide housing counseling, credit repair, and home readiness education to help transition from renting to homeownership. There are even programs that offer grants to help owners remain in their homes. From improving curb appeal to energy efficiency to repairing violations, many grants provide relief to those struggling to remain in their home.
“Without exception, there is no county in the U.S. that has enough affordable housing. The crisis is national and it is growing.”
What Affordable Housing Isn’t.
It’s important to remember that affordable housing is not a handout. In fact, the lack of affordable housing in our country has led to a host of negative effects. Did you know that the lack of affordable housing has led to:
- High Rents
- Displaced Families
- Substandard Housing
- Racial Segregation
- Unemployment
- Rising Crime Rates
- Increased Poverty
- Adverse Physical and Mental Health Effects
- Developmental Delays
- Poor Academic Performance
These outcomes are disastrous for our neighborhoods, families, businesses, and schools and only propel the long-term negative impact on our communities (AD&V). In fact, housing insecurity is the foundation of many of the problems we face in this country. “Without exception, there is no county in the U.S. that has enough affordable housing. The crisis is national and it is growing.” (Capps)
GROWTH
So, who is GROWTH and why do we care about affordable housing?
GROWTH is an initiative of the National Community Reinvestment Coalition (NCRC). We’re focused on removing barriers like systemic racism and economic inequity from our nation’s housing market. Our mission is to promote homeownership for low-to-moderate income people or in low-to-moderate income neighborhoods, empowering homebuyers to build stable lives and vibrant, diverse, mixed-income communities. We believe that all people should have access to homeownership and an opportunity to build generational wealth through their home. But too many segments of our population, specifically LMI, Black, and Hispanic households, don’t have access to homeownership. And rising rent and home prices have only exacerbated the need for affordable housing. For many people, owning a home is simply out of reach.
Our pathways to homeownership include:
- Increasing the availability of affordable homes in low-to-moderate-income neighborhoods and for low-to-moderate-income individuals and families through renovations and ground-up construction
- Providing financial counseling and homebuyer education to qualified homebuyers
- Creating construction jobs and economic opportunities within those neighborhoods
Why is affordable housing important?
Think about it. How much more could you accomplish when you have a stable roof over your head? How much more could you achieve if you don’t have the stress of being displaced? How much more would you invest in your neighborhood if you owned a piece of it? And how much more does the community benefit when we rebuild our neighborhoods?
Affordable housing is a platform for creating self-sufficiency and developing human potential. Affordable homeownership provides a means of saving for the future. And it stimulates economic development. Affordable housing increases local purchasing power, boosts job creation and retention, and generates new tax revenues. When owners pay property taxes, it helps local government, schools, and infrastructure. If they have a home that they can afford, they also have more expendable income to spend on dining out and local retail. Affordable housing and homeownership also lead to better health and health outcomes in our communities and better school performance and cognitive development. And it promotes diversity, tolerance and reduces segregation and increases equality. Affordable housing doesn’t just help families—it helps everyone.
What is Affordable Housing? Additional Resources
The impact of housing affordability on the economy | Cost of Home (habitat.org)
5 Reasons Affordable Housing Creates a Better World (alvarezdiazvillalon.com)
Sources:
AD&V, About. “5 Reasons Affordable Housing Creates a Better World.” Álvarez-Díaz & Villalón, 14 Jan. 2019, www.alvarezdiazvillalon.com/5-reasons-affordable-housing-creates-better-world/.
Capps, Kriston. “Every Single County in America Is Facing an Affordable Housing Crisis.” Bloomberg.com, Bloomberg, 18 June 2015, 5:28 pm, www.bloomberg.com/news/articles/2015-06-18/zero-counties-in-the-u-s-have-enough-housing-for-families-in-extreme-poverty.