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What is ‘affordable housing’?

MinnPost photo by Corey Anderson
Chip Halbach said the federal government defines housing as “affordable” if it does not exceed 30 percent of a person’s gross income.

Affordable housing: On the face of it the phrase is pretty straightforward and often makes an appearance in news stories about housing the homeless, as in there’s a lack of it.  

Yet, coming from those who advocate for low- and moderate-income people, the definition is more complex.

Prompted by a reader asking: “What do you mean by ‘affordable housing’?”, I called Chip Halbach, who heads the Minnesota Housing Partnership, a nonprofit that works with communities and housing developers around the state to create and preserve housing for lower-income people.

“I’ve been working on that answer for coming up on 30 years,’’ said Halbach, who nevertheless plowed ahead to define it as housing that is created to “bridge the gap” between market-rate housing and what lower-wealth people can afford.  

Some call it workforce housing or senior housing, he said. Others consider it anything low-rent, which could include so-called “slum” housing, which category he rules out.

Halbach said the federal government defines housing as “affordable” if it does not exceed 30 percent of a person’s gross income, although wealthy households can afford to pay more. This means persons working full time for $10 an hour — which exceeds the $7.25-an-hour federal minimum wage most often paid in Minnesota — should be able to afford to pay $500 a month for rent.

In the Twin Cities and outstate Minnesota there is not enough of that priced-right housing, even with financial assistance from government and philanthropic housing programs. That means the need to create more. 

Comments (13)

  1. Submitted by Matt Haas on 02/06/2014 - 09:53 am.

    That’s it?

    Well glad I spent the time click that.

  2. Submitted by jody rooney on 02/06/2014 - 01:26 pm.

    So if you built market rate houses or unit in Minneapolis

    they would essentially have to be less than $80,000 for a $10.00/hour employee.

    Since Minneapolis taxes are horrendous the first thing I would do would be to negotiate with the city 0 property tax for x number of years. Then gradually increase property taxes to full tax rate.
    Then I would look at modular or manufactured housing (not mobile homes) and some compact designs like the Katrina Cottage with extensions. So start there.

  3. Submitted by Ray Schoch on 02/06/2014 - 04:01 pm.

    Even the definition

    …needs to be fleshed out. Does the 30% figure Mr. Halbach provides include utilities and maintenance, or is it just the monthly rent/mortgage payment?

    These things all interrelate. Wages, housing transportation, food, clothing. I think even someone who was an advocate for “affordable housing” would be hard-pressed to find single-family housing, including duplexes and even quadriplexes, for $80,000, and the Twin Cities market is itself quite affordable when compared to metro Denver,where I came from to live here. Indeed, the market for modular and manufactured housing *ought* to be huge, but a combination of 50-year-old zoning laws, inflexible building codes written by special construction industry interests, and economic bigotry have made both manufactured and modular housing a tough sell, and to approach it from another angle, we can’t ignore what happens to the incomes of construction tradesmen if/when we make a conversion from on-site and stick-built housing to factory-manufactured modular housing.

    The concepts of what constitutes “affordable housing,” as well as the accompanying assumption, by both private interests and government policy, that “home ownership is better than renting,” could stand some careful reexamination, as could zoning regulations and the pernicious attitude that somehow renters are lesser human beings than home owners.

    • Submitted by Matt Haas on 02/06/2014 - 04:31 pm.

      I don’t think anyone wojld suggest

      That renters are in any way inferior (outside of some snooty housing associations perhaps), but there is something to be said for paying toward a tangible asset as opposed to filling a landlord’s pockets, be they an individual or a corporation. This becomes especially true when rental rates are high enough to make taking out a mortgage a wash financially, if not an improvement. Would those in need of affordable housing be better served in the long run by homes they can OWN affordably, versus being stuck on the constant rental merry go round of fluctuating rental rates, questionable maintainance and safety, and the ever present threat of eviction.

      • Submitted by Wayne Coppock on 02/07/2014 - 08:55 am.

        Actually plenty of neighborhood associations are also pretty disdainful of renters too. They think that the only way anyone can care about their neighborhood is if they have staked a claim and have a financial incentive of owning a home in the area. Just because renters are more mobile doesn’t mean we care any less about the areas we live in.

        I also feel like renters aren’t as likely to join their NIMBY parade when confronted with the prospect of any new development (because for a renter it’s a potential new place to live), which may be another reason why they try to exclude us.

        • Submitted by Matt Haas on 02/07/2014 - 09:17 am.

          I can see that

          But I would imagine that would fall under the “snooty” portion of the equation mentioned earlier. I guess my focus was more on areas that might have a mode affordable class of home, generally not places where entities like neighborhood associations have the sort of pull you are accustomed to. That being said, I know that the time I spent as a renter was a period of little community involvement, mainly due to the lack of personal connection to the areas I lived, not to mention a lack of ability to form those connections. When you don’t know the people around you, or the faces are continually changing (I was mainly a large scale apartment complex renter) its hard to form the social networks needed for that sort of interaction. While renters certainly care about the communities in which they live, they may not be as well placed to affect any change to those communities without a longer term investment in them.

    • Submitted by Matt Touchette on 02/06/2014 - 05:50 pm.

      Yes it does…

      The government’s 30% figure is based on the actual cost of housing, which includes utilities and basic upkeep (but not major repairs). The government’s definition only serves to generically define “affordable housing” as something that a person can afford, the term is not necessarily meant (under that definition) to serve as a descriptor for housing that is priced to serve those in lower income brackets.

      I definitely agree with your last paragraph regarding the reexamination of current assumptions and philosophies regarding affordable housing.

  4. Submitted by Chad Haatvedt on 02/06/2014 - 07:12 pm.

    Really? A mortgage on even $10/hr?

    Let’s do a little math here…
    Annual income ~ $20,000
    Monthly income ~ $1,667
    30% for housing (PITI only, not utilities) = $500/m

    Let’s be wildly optimistic and say this low wage earner has stashed away $10,000 for a down payment, the most expensive home this person could afford is roughly $77,000.

    If this person found a dwelling (notice I did not refer to it as a house or home) it would likely be in very poor condition and require a substantial rehab to make it habitable. Money this person does not have nor can he/she afford to borrow.

    Check the real estates ads in your area!

    In my community the city worked with a developer to redevelop a brownstone site with “affordable” housing starting out at more than $150k per dwelling.

    Do the math.

    Sure it’s affordable, but then so is a $500,000 house if you have enough income. So when you see a proposal for affordable housing, ask “for who”?

  5. Submitted by Paul Udstrand on 02/07/2014 - 09:08 am.

    This is kinda weird

    Well, if most of the people you’re talking about make $7.50 an hour why are calculating “affordable housing” for people who make $10.00 an hour? Aside from simplifying the math? If you work it out for a minimum wage earner the monthly housing allowance comes to $390 a month, so that’s what? a $50k house? AND remember that’s $390 after income and SS taxes. Sure, they get that money refunded but they they still have pay all year. Meanwhile the median home is currently priced at around $150k, so if you’re looking for a house, you’re looking in a market full of houses three time more expensive than you can afford. AND as Chad pointed out, such homes are not going to in livable condition for the most part.

    I don’t imagine an apartment for $390 a month is going to be very cozy either. The only thing that might make all of this more manageable is room mates or spouses that double the income, but that can be complicated by a variety of factors as well, for instance while married couples could get by with a single bedroom apartment which is probably in the range we’re discussing, room mates typically don’t want to sleep in the same bed, so they’re looking at a two bedroom apartment which is unlikely to come in at $390 a month.

  6. Submitted by John Appelen on 02/07/2014 - 10:44 pm.

    Adequate Housing?

    I am amused that people are envisioning “adequate housing” in the “affordable housing” space to be homes, 1 bedroom apartments, single occupancy, etc.

    Room mates for single people seem like a logical and practical solution, or compact studio apartments. If there are kids involved, it would be nice to encourage a monogamous couple to share the parental and economic burdens.

    So I have to ask, do you really think that low income single individuals should be entitled to single occupancy home or a 1 bedroom apartment? Should a single parent be entitled to a 2 bedroom apartment no matter their income?

    What do you think is adequate housing?

    Personally I think we need more old time boarding houses where low income folks just rented a room, thereby splitting the costs with many others. Or maybe hostels/ dormitories…

    • Submitted by Matt Haas on 02/08/2014 - 10:28 am.

      Yeah, Bring on the Third World

      Who needs dignity after all.

      • Submitted by John Appelen on 02/08/2014 - 06:44 pm.


        No one said the housing was to be cold, wet, dirty, old or in anyway third worldish. Is renting a room, studio, having room mates, etc in anyway third worldish? If you think so I am guessing you haven’t been to the third world. So I’ll ask again.

        What do you think is adequate housing low income housing?

        The goal of low cost housing in my view is to keep people warm, safe, etc. How many square feet and amenities does that take?

  7. Submitted by John Appelen on 02/10/2014 - 10:11 am.

    Still Curious?

    Per Matt’s third world comment, I am still curious what people think..

    What do you think is adequate housing low income housing?

    The goal of low cost housing in my view is to keep people warm, safe, etc. How many square feet and amenities does that take?

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