Affordable housing

Affordable housing is a dwelling where the total housing costs are affordable to those living in that housing unit. In the United States, a commonly accepted guideline for housing affordability is a housing cost that does not exceed 30 percent of a household's gross income. Housing costs considered in this guidleine generally include taxes and insurance for owners, and sometimes include utility costs. When the monthly carrying costs of a home exceeds 30 percent of household income, then the housing is considered unaffordable for that household.

Where the demand for available housing exceeds supply, a large amount of the housing stock is not affordable to much 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 U.S. are where there is the least demand and an adequate supply. Comprehensive data for the most affordable and least affordable places in the U.S. is published each year by an affordable housing non-profit organization, the National Low Income Housing Coalition.

Consequences of affordable housing shortages

A common measure of community-wide affordablity is the number of homes that a household with a certain percentage of median income can afford. For example, a community might track the percentage of its housing that is affordable to households earning 60% of median income. In addition to the distress it causes families who cannot easily find a place to live, lack of affordable housing is considered by many urban planners to have negative effects on a community's overall health. For example, lack of affordable housing can make low-cost labor more scarce, and increase demands on transportation systems (as workers travel longer distances between jobs and affordable housing).

Policy tools to address affordable housing

Numerous policies in the U.S. 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. Other more recently promoted policy tools include relaxation of prohibitions against accessory dwelling units, and reduction of the amount of parking that must be built for a new structure.

Affordable housing is a controversial reality of contemporary life, for gains in affordability often result from expanding land available for housing or increasing the density of housing units in a given area. 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.

Additional resources

Public agencies that contribute to the work of ensuring the existence of a steady supply of affordable housing in the United States are the U.S. 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".