People often think ‘affordable’ housing is much more expensive than it
actually is, and then conclude it’s a scam to make housing for rich
people. But this is often based on a misunderstanding of how the
prices are set.
Let’s say a unit is “50% AMI” somewhere with an area median income
(AMI) of $100k. You might think, and I’ve seen a bunch of people with
this confusion, that units would rent for 50% of $100k: $50k/y
($4,170/month), but it’s much cheaper than that.
Affordable has a very specific meaning in this context: spending no
more than 1⁄3 of your income on housing. So you might think 50% AMI
is ‘affordable’ to someone earning at the 50th percentile: 1⁄3 of
$100k, or $33k/y ($2,750/month), but it’s cheaper than that, too!
Instead, 50% AMI means someone earning 50% of the AMI would be
spending 1⁄3 of their income on housing. This is 50% of 1⁄3 of the
AMI, and in this case that would be $17k/y ($1,390/month).
Now, I don’t think affordable housing solves everything: if it were
widespread I think it would
be exploited and it can be a distraction from just getting a lot
of units built, but the term “affordable housing” is actually a decent
operationalization of whether housing is something regular people can
afford.
Misconceptions on Affordable Housing
Link post
People often think ‘affordable’ housing is much more expensive than it actually is, and then conclude it’s a scam to make housing for rich people. But this is often based on a misunderstanding of how the prices are set.
Let’s say a unit is “50% AMI” somewhere with an area median income (AMI) of $100k. You might think, and I’ve seen a bunch of people with this confusion, that units would rent for 50% of $100k: $50k/y ($4,170/month), but it’s much cheaper than that.
Affordable has a very specific meaning in this context: spending no more than 1⁄3 of your income on housing. So you might think 50% AMI is ‘affordable’ to someone earning at the 50th percentile: 1⁄3 of $100k, or $33k/y ($2,750/month), but it’s cheaper than that, too!
Instead, 50% AMI means someone earning 50% of the AMI would be spending 1⁄3 of their income on housing. This is 50% of 1⁄3 of the AMI, and in this case that would be $17k/y ($1,390/month).
Now, I don’t think affordable housing solves everything: if it were widespread I think it would be exploited and it can be a distraction from just getting a lot of units built, but the term “affordable housing” is actually a decent operationalization of whether housing is something regular people can afford.
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