People With A Wide Range of Incomes Need Affordable Housing

As discussed in What Is Affordable Housing, it is generally described as housing affordable, at 30% of income, to households whose incomes are at or below some percentage of the Area Median Income (AMI).  Depending on the program involved, the percentage chosen is usually 60% or 80% of AMI.  Quite a large spectrum of households falls within these ranges.  The table below shows median annual incomes for a variety of jobs in the metropolitan area.  The table is derived from Fourth Quarter 2006 information, available here, from the Minnesota Department of Employment and Economic Development.  See the Family Housing Fund website for a more detailed table.

Key Facts About Who Pays More Than They Can Afford For Housing

While more than two thirds of households with incomes at or below 50% of AMI pay more than they can afford or have similar housing problems, only 9% of households with incomes above 80% of AMI have such problems. 

Although disproportionately concentrated in the central cities, more than half of the low income households with housing problems (usually, high costs) in the metro area currently live in the suburbs. 

Lower income renters are far more likely to have housing problems than lower income owners.

A very large proportion, 87%, of lower income large families, of more than five people, have housing problems.  

While Non-white households are far more likely that white households to be income eligible for affordable housing programs, the total number of lower income white households who are income eligible for affordable housing and who have housing problems is substantially larger than the number of non-white households.

1. City policies which truly address affordable housing needs will be providing housing for the variety of working households illustrated by the examples above.
   
   
2. To be effective, these policies must pay adequate attention to the pressing needs of households with incomes less than 50% of AMI, of large families, and of renters;  they must emphasize fair housing principles; and they must become as effective and productive in the suburbs as  in the  central cities.

DETAILED ANALYSIS

With each census, HUD commissions a special census run aimed at discovering the characteristics of lower income households with housing problems.  The results for the 2000 census, while somewhat out of date, probably still serve as a useful guide to the types of households in need of affordable housing.  The HUD data is produced for every community in the country, and displays the data by owner v. renter, household size and type, income level (30%, 50%, 80% AMI, adjusted for household size), and race and ethnicity.  Housing problems are defined as paying more than 30% of income for housing costs (with households paying more than 50% of income broken out separately), or living in housing which is overcrowded or lacking in basic facilities.  See the box labeled "HUD/CHAS Dataset" on the Act Locally page for a link and instructions to download detailed tables for the metro area.  The HUD data provides a detailed guide to the types of households needing affordable housing.  Here is a summary by income level:

Note that while a vast majority of households with incomes less than 50% of AMI pay more than they can afford for housing or have other housing problems, only a small percentage of households with incomes greater than 80% of AMI have such problems. 

Most of the HUD housing programs have priorities for households at or below 50% of AMI.  The following table looks at some important characteristics of these households:

Renters, non-white households, and central city residents are disproportionately low income.

Looking only at those households with incomes at or below 50% of AMI, the following table looks at housing problems by type of household:

This table indicates basic characteristics of the households most in need: those paying more than half their income for housing costs.

Note: Some rounding errors; Detailed data on % paid not available by race/ethnicity.

How to read this table: for example, 63% of the households paying more than 50% of their income for housing have incomes less than or equil to 30% of AMI.  Of  households with incomes  less than or equal to 30% of AMI, 53% pay more than 50% of their income for housing.

A study, "The Next Decade of Housing in Minnesota," prepared by BBC Research for the Family Housing Fund, Greater Minnesota Housing Fund, and Minnesota Housing Finance Agency also looked at 2000 census data, but looked at households whose incomes were at or below 60% of median income without adjustment for household size (in contrast to the HUD data above, which does adjust for household size).  The Metropolitan Council has used similar methodology in preparing its analysis of housing needs for the decade 2011-2020.  BBC found the following for the seven county metropolitan area:

It's hard to make a detailed comparison between the census data prepared by HUD's and BBC's (and later the Metropolitan Council's) use of the standard census data because BBC used 60% of AMI rather than the 50% used for HUD programs, did not adjust for household size, and didn't use the same household categories as HUD.  It does seem clear at least that the way in which BBC and the Metropolitan Council use the data, results in large numbers of small households with relatively higher incomes counted as "low income" would not receive housing priorities in HUD's housing programs. 

One danger which this poses is that cities get to count the production of housing units toward meeting their "low income" goals which would not meet HUD's standards or those of the low income housing tax credit program (which uses 60% of median as an income limit, but does adjust for household size).  For instance, the Metropolitan Council could count a one bedroom unit renting for $1,100 as an affordable housing unit because a household at 60% of median income (60% x $77,600 = $46,560) can afford 30% of that income monthly or $1,164.  But if incomes are adjusted for household size, as HUD and the tax credit program require, a one person household at 60% of median makes only $33,000 and can afford to pay no more than $835 for rent.