Affordable Housing
Affordable Housing

What is “Affordable Housing”?

Affordable housing, as defined by the U.S. Department of Housing and Urban Development (HUD), is considered affordable when households spend 30% or less of their income on housing costs.

Why the need for “Affordable Housing”?

Access to “affordable housing” is essential to ensure that individuals and families can thrive. For perspective, meeting the criterion for a two-bedroom apartment with a Fair Market Rent (FMR) of $2,030 requires a monthly income of $6,766 or an annual income of $81,191. This places a significant burden on renters, as they need to earn almost three times the state minimum wage in California to afford average rents.

How is “Affordable Housing” Achieved?

“Affordable housing” is often achieved through government subsidies & deed restrictions. Unlike market-rate housing developers, affordable housing developers face the challenge of not recouping costs through typical sales & rental revenues. To bridge this gap, they rely on various financing mechanisms provided by federal, state, and local governments. In California, developers often utilize up to 15 different funding sources. Additionally, federal and state programs, such as project-based vouchers, HOME Investment Partnerships, and Community Development Block Grants, contribute crucial funding for construction, maintenance, and rent subsidies, ensuring the financial feasibility of “affordable housing” projects. Further, new housing units are often deed-restricted for low-income households to ensure their continued use for “affordable housing” stock. These deed restricted units are categorized based on the Area Median Income (AMI): low-income (50-80% of AMI), very low-income (30-50% of AMI), and extremely low-income (below 30% of AMI).

How are we doing in CA when it comes to “Affordable Housing”?

Not great. Policymakers and stakeholders must collaborate to implement more sustainable solutions that prioritize and attract the development of “affordable housing” over market rate housing options. In nearly all development projects, the goal is to make a profit. If that cannot be achieved, or the process and programs available are too cumbersome and difficult for developers to utilize, then we’ll forever be climbing uphill to catch the “affordable housing” demand in CA.

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