What Is Affordable Housing in 2007?

What Is Affordable Housing in 2007?

Policymakers consider housing to be affordable when a family pays no more than 30 percent of their total income in rent or mortgage payment, insurance and taxes. A reasonable utility allowance is also frequently included in the definition. This definition is widely used by local, state and federal governments and recognizes that households have other essential expenses including food, clothing, healthcare, childcare, education and transportation. Housing is affordable if it meets this 30 percent test.

When we use the term affordable housing, we also mean housing that is affordable to people with low or moderate incomes. The definition of “low-income” is established by the U.S. Department of Housing and Urban Development (HUD) as a percent of the Area Median Income (AMI) and varies annually from region to region and by household size. You can find HUD’s income levels for the state on the California Department of Housing and Community Development’s website: www.hcd.ca.gov. (See Graph #1)

According to the California Employment Development Department, the occupations that will add the most jobs in California are low-paying and require no advanced education. Graph #2 shows how many hours above the standard forty hours per week people at various wages have to work to afford the fair market rent of $1,250 for a two-bedroom apartment in Alameda and Contra Costa counties.
Graph #3 tells us how many hours a person earning a living wage (including receipt of health benefits) would have to work to afford a two-bedroom apartment at the fair market rent of $1,250. In the East Bay, the four cities listed are the only ones that have a living wage ordinance. Companies which do business with these cities pay a living wage so that people can afford to live in the communities in which they also work. Living wage standards vary by region, and there is no requirement for a city to have a living wage. Also, as you can see, a living wage is not a “housing wage” – it does not guarantee that people can afford housing in that area.
According to the National Association of Home Builders / Wells Fargo Housing Opportunity Index (HOI), buying a home in the East Bay is getting more difficult. In the fourth Quarter of 2006, only 9.3 percent of all East Bay households could afford to buy a median-priced home. Despite the high median family income, $83,300 for a family of four, the East Bay is ranked as the 19th least affordable metropolitan area in the nation. (Source: www.nahb.org/page.aspx/category/sectionID=135). (See Graph #4)

In Alameda County, the January 2007 median price for a home was $570,000. In Contra Costa during the same period, it was $550,000. In the Bay Area as a whole, the median price for a home in January 2007 was $601,100. (Source: DataQuick Information Systems www.DQNews.com)

The “new generation” of affordable housing developments by non- profit developers offers innovative, practical solutions to the East Bay’s housing crisis. Non-profit developers are hiring renowned architects to design high-quality, award-winning housing that fits into the context of the neighborhood. Additionally, these professionally managed properties deter crime and increase neighborhood vitality.

Affordable housing developments have also made significant contributions to the stability and cohesion of neighborhoods throughout the region. Learn how affordable housing changes lives and neighborhoods, as residents of affordable housing tell their stories in this guidebook on pages 25-28. See the difference affordable housing makes by reading the profiles of recently completed East Bay developments under the link "Affordable Housing Education Campaign". And find out more about what you can do to find and support affordable housing in the Bay Area in our "Get Involved" section.