Affordable housing

Affordable housing is housing that people can afford. In America the commonly adopted threshold for "affordable" is any amount per month of a household's gross income up to 30 percent. In general this is inclusive of taxes and insurance for owners. When the monthly carrying costs of a home exceeds 30%, then the housing is considered unaffordable for that household.

Especially costly areas in the United States, where the demand for available housing exceeds supply, are characterized by high percentages of housing stocks that are not affordable to high percentages of the population. Such areas commonly experience income growth for middle and working class households at rates lower than the rates at which property values rise. These same areas also tend to have a limited supply of land on which new housing can be built, or an array of statutes that make it difficult or costly to generate expanded supply. The most "affordable" places in the US are where there is the least demand; fewer people want to live in Peoria, Illinois, one of America's most affordable places, than in Santa Cruz, CA, one of the most costly.

Numerous policies in the US and abroad have been designed to address the problem of inadequate supplies of affordable housing. Sophisticated secondary market mechanisms, inclusionary zoning, and land banking are three prominent tools, as well as tax and fiscal policies that result in reducing the cost of mortgages and the cost of borrowing.

Affordable housing is a controversial reality of contemporary life, for gains in affordability often result from reducing in livability. Ensuring a steady supply of affordable housing means ensuring that communities weigh real and perceived livability impacts against the sheer necessity of affordability. The process of weighing the impacts of locating affordable housing is quite contentious, and is laden with race and class implications.

Important public agencies that contribute to the work of ensuring the existence of a steady supply of affordable housing in the United States are the US Department of Housing and Urban Development (HUD), the Federal Home Loan Bank, Fannie Mae, and Freddie Mac. Important private sector institutions worth consulting are the National Association of Home Builders and the National Association of Realtors. The Brookings Institution and the Urban Institute and the Joint Center for Housing Studies at Harvard University are also valuable centers with staff dedicated to the analysis of "affordable housing".