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Companion
PowerPoint
Presentation for the
Introduction to
Housing textbook
Housing Affordability
Lack of affordable housing is a crisis for both
communities & individual households

► For communities—attracting & keeping

employment opportunities; quality
neighborhoods
► For households—self-sufficiency, stability &
improves life outcomes for children

There is debate on this issue

 When is Housing Affordable?

►A household should spend no more than

30% of its total income on housing costs,
including mortgage or rent payments &
utilities
► More than 30%: housing cost burdened
► More than 50%: severely housing cost
burdened
► Variety of housing affordability indices exist
13.4 million renter households & 14.5 million
owner households have housing affordability
problems

Factors influencing affordability:

► Income level
► Household size
► Geographic variation

Affordability is tied to a particular geographic

area’s median household income & median
housing costs
 Households and Housing Costs
► Median cost of a new single-family home:
1982 $60,300
2002 $187,500
Increase of 170%
► Due to:
Inflation
Increases in cost of materials & labor
Increase in land values
Regulations & development charges
Households’ demands for more space of higher
quality
 Homeownership and Affordability

► Affordabilityindex: relationship between the

median income in an area and the median
income required to quality for a mortgage
► 100 = households with median income
could purchase the median priced home
► In 2002: 136.4
► But minority, single-parent & low-income
households face greater affordability
problems
 Renting and Affordability
► Poor households that rent suffer the most
severe housing cost burdens
► Supply of low-cost rental housing units has
not been sufficient for the demand
► Much of that housing is old & located in
neighborhoods with little access to jobs &
adequate services
► Government assistance is available, but is
not adequate
 Understanding the Shortage
Increasing the cost of housing: Additional
space & amenities

Compared to 20 years ago homes are:

► Larger
► Have more bedrooms (3-4)
► Have more bathrooms (2 ½)
► Have at least a two-car garage
► But, smaller lot
Increasing the cost of housing: The role of
local government regulations

Increased government regulation leads to

higher housing costs & decreased amounts
of new construction
► Impact fees
► Code restrictions
► Growth restrictions
► Exclusionary zoning
Increasing the cost of housing: Failure to
preserve existing affordable housing

► Loss of affordable units to gentrification

► Loss of units due to lack of repairs
► Too expensive to rehabilitate units under
new codes, so are demolished or left to
decay
 Homelessness
► For some families, a failure to find
affordable housing leads to homelessness
► Homeless—those in shelters or in a public or
private place not designed for, or ordinarily
used as, a regular sleeping accommodation
for people (800,000 each night)
► Hidden homeless—living with relatives or
friends (doubled up) in overcrowded
conditions or living in substandard housing
Who are the homeless?
► Families with children (fastest growing
segment)
► Single adults, often men 30-50; but many
women as well
► Runaway youths
► Suffer from mentall illness
► Struggle with substance abuse
► Need affordable housing—
rental assistance
► Need to earn a sufficient wage—
living wage
► Shelters (day and/or night)
► Temporary assistance through nonprofits
 Solving the Affordability Problem
► Public education efforts—the public must
support the need for affordable housing and
be willing to provide the necessary support
► Land use strategies to reduce the cost of
housing
--higher density & mixed-use
development
--inclusionary zoning
--Community Land Trust (CLT)
► Reduction in building & management costs
--streamlined building methods &
standardized components
--factory-built housing
--donated labor & materials
--resident labor (sweat equity)
► Reduction in finance costs
--low-interest loans for constructing or
rehabilitating affordable housing
--Low Income Housing Tax Credit
--HOME & CDBG
► Increaseresources for housing
--to builders to produce affordable
housing
--home purchase assistance to low- &
moderate-income homebuyers
--Public Housing & Section 8 vouchers to
renters