UPL 304 Planning Principles II (Housing and Social Planning)

Instructor: Dr. Abdellatif Qamhaieh Department of Urban Planning Spring 2011

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Overview
How is affordability defined and measured? Who is impacted? What has caused reduced affordability and how can we create more?

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Affordability Defined
As defined by the U.S. Department of Housing and Urban Development (HUD): A household is to spend no more than 30% of gross income on housing costs:
Renter: rent plus utilities Homeowner: mortgage (principal & interest), property taxes, property insurance, utilities

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Affordability Defined
Household: all people who occupy a housing unit as their usual place of residence (excl. those living in group quarters such as dorms and institutions)
Gross income: income of each member of the household that is 15 years and older (incl. wages, social security income, retirement income) Utilities: all utilities (payments to ADDC), not telephone.

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Affordability Defined
Housing cost burdened: If spending more than 30% of gross income on housing Severely housing cost burdened: If spending more than 50% of gross income on housing
Question: What is missing in these numbers?
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Affordability Defined
Percentage of Renter-occupied Units Spending 30 Percent or More of Gross Household Income on Rent and Utilities Percentage for Florida is 50.5%

Source: U.S. Bureau of the Census 2004 2/20/2012 6

Affordability Defined
Housing Affordability Index: Developed by the US Department of Housing and Urban Development (HUD) to understand the conditions of home-ownership nationwide The affordability index looks at the relationship between the median income in the area, and the median income required to qualify for a mortgage. An affordability index of 100+ indicates that a household with a median income could afford to buy a house of a median price. It is greatly affected by interest rates.

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Affordability Defined
New affordable housing index: Housing and Transportation Affordability Index by Brookings Institution
(housing costs + transportation costs) / household income Housing and transportation are two largest household expenditures Impact of transportation costs on affordability of housing choices
High cost of fuel Lack of public transit options Increased need to drive
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Who is Impacted by Lack of Affordability?

Paying too much and/or living in poor quality housing: Single-parent families Welfare recipients Minority households: labor and housing market inequities Elderly: limited and fixed incomes, and special needs Persons with disabilities Homeless: individuals and families; hidden homeless Rural households: more likely than urban dwellers to live in inadequate housing

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Issues Faced by Cost- Burdened Households

Less financial resources for other basic needs such as food, transportation, education, health care (incl. insurance), clothing Living in substandard and/or overcrowded conditions Less stability for children

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Affordability and Income

Most severe housing cost burdens are experienced by lowest income people

2/20/2012 National Low Income Housing Coalition, 2004 Source:

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Income Classification
To determine a households eligibility for housing subsidies, many government programs set income limits These income limits are tied to the Area Median Income (AMI), which HUD calculates annually for each metropolitan and nonmetropolitan area AMI is the benchmark to classify each household based on income level, household size and location see chart
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Income Classification
Major income categories:
<30% of AMI: extremely low income 30-50% of AMI: very low income 50-80% of AMI: low income 80-120% of AMI: moderate income

Example:
To be eligible for a public housing unit, a households income cannot exceed 80 percent of AMI
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Important Questions
Should the government be responsible for providing housing assistance for the poor? To what extent?
Do you think the UAE government does a good job in providing housing for the lower-income segments of the society? Is housing assistance a form of socialism?

Is it better for the groups from different socio-economic backgrounds to live in the same areas?
Who do you think benefits the most from housing assistance programs?
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Reduced Affordability
Median cost of a new single-family home in the U.S.: 1982: $60,300 2002: $187,500 Increase of 170%

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Reduced Affordability
What are the causes of reduced affordability for housing in UAE ?

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Creating More Affordability

What governments can do to create more affordable housing? Inclusionary zoning and density bonuses Public education and awareness

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