Who Needs Affordable Housing?

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.

Occupation:
Median Annual Income:













Percentage of AMI:


Police Officer
$55,210













71%


Elementary Teacher
$47,075













61%


Paramedic
$38,728













50%


Assembly Worker
$29,957













35%


Bank Teller
$22,568













29%


Child Care Worker
$18,034













23%



Affordable housing programs of one sort or another are aimed at families with all of these sorts of jobs and incomes.  And as the data below shows, many of these households are currently paying more than they can afford for housing.

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.

Analysis of who needs affordable housing in the metropolitan area leads to two key policy conclusions:
  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:

 

Income as Percent AMI:

Number of Households:

Households With Problems:

% Who Have Problems:

Below 30%

99,146

73,798

74%

30%-50% 

105,959

65,366

62%

50%-80%

172,300

60,197

35%

Above 80%

643,907

55,811

9%

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:

Household Description:

Total Households:

At or Below 50% AMI:

Percent <=50% AMI:

Metro Total

1,021,312

205,105

20%

Renters

292,202

123,920

42%

Owners

729,110

81,185

11%

White

897,735

153,365

17%

Non-White

123,577

51,740

42%

Mpls-St.Paul

274,375

92,186

34%

Suburbs

746,937

112,919

15%

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:

HOUSEHOLDS <=50% AMI:







Total Households:








Households With Problems:










Percent With Problems:

Metro Total







205,105








139,164










67.90%

Cost >50% income







--








70,795










35%

Cost >30% to 50%







--








60,881










30%

Other Problems only







--








7,488










4%

Renters







123,920








89,415










72.20%

Owners







81,185








49,721










61.20%

Elderly 1&2







69,827








36,322










52.00%

Small related 2-4







52,151








22,622










43.40%

large related 5+







16,732








14,556










87.00%

Other







66,395








48,515










73.10%

White







153,365








100,213










65.30%

Non-white







51,740








38,951










75.30%

Mpls-St. Paul







92,186








63,139










68.50%

Suburbs







112,919








76,025










67.30%

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

Households Paying 50% or More of their Income










Total Paying >=50%









% Paying >50%









% of Group Paying  >50%

Total Paying >50% Income










83,363









--









--

Income <=30% AMI










52,530









63%









53%

Income 30-50% AMI










18,265









22%









17%

Income 50-80% AMI










8,407









10%









5%

Income >80% AMI










4,125









5%









1%

Renters










45,233









54%









15%

Owners










38,343









46%









7%

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:

Household Description:












Total Households:












With Children:










Seniors:











Other:

Low Income Households












372,855












90,692










103,866











178,297

Percentage












100%












24%










28%











48%

>30% for housing












171,062












41,191










50,603











79,268

Percentage












100%












24%










30%











46%

 

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.

 



Housing Preservation Project, 2007
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