How Are We Determining What is Affordable?

by Kate Perkins, Community Blogger.

Often when looking at the new housing developments coming up all over the District, many claiming to provide ample “affordable housing,” we begin to wonder—affordable, but affordable for who?

Similar to other ambiguous terms like “organic” or “fair trade”—as adjectives, many companies and individuals can employ these terms to conjure up images of trustworthiness and earth-friendly products while secretly doing reprehensible things. In the case of “affordable” housing, it’s important for us to define our terms. What is affordable?

The US Department of Housing and Urban Development (HUD) bases its income limits for variety of housing programs on a standard called Area Median Income (AMI). Affordability restrictions are calculated as percentages of this Area Median Income measurement.

The Area Median Income is calculated using recent Census data. HUD then uses this number to determine several limits:

• Low-income is defined as 80% of median family income for the area.
• Very low-income is defined as 50% of median family income for the area.

When a new housing development comes into the District or another city, often housing is considered affordable when it meets income requirements for those with 50% or 80% of this Area Median Income. Appropriate rent/payments for each of these income brackets would be 30% or less of each group’s income (more than 30% of income paid towards housing is considered a financial burden).

In the Washington, DC area, this measure becomes problematic when considering the disparities between the District and surrounding suburbs. When HUD calculates the AMI for the Washington Metropolitan area, they look beyond the District alone and include income brackets from surrounding counties like Montgomery County, Fairfax, and Prince Georges. The area is very large stretching towards Fredericksburg, VA and even Frederick County, MD.

By including all of these both wealthy and median-income surrounding counties, the AMI for the Washington, DC area for 2008 is $99,000. The impact on District residents is dramatic where median income is less than half of the AMI for 2008. By the 2000 census, the AMI for the Washington Metropolitan area was $73, 245 compared with the District’s median income of $40,127. Furthermore, in 2000 several Wards of the city posted median incomes far below the District’s median including Ward 1 ($36,902), Ward 5 (34,433), Ward 7 ($30,533), and Ward 8 ($25,017).

However, when HUD goes to calculate “affordable” housing, they do not consider each Ward’s median income or even the District’s median income but instead this poorly created Area Median Income.

When the Area Median Income is $99,000, affordable housing becomes “affordable” according to HUD when it’s affordable for individuals making approximately $50,000-$80,000 per year. This standard applies both in the areas surrounding Washington, DC but also within the District as well.

This creates a horrible situation for District residents living far below this supposed standard for qualifying for “low income.” Arbitrarily defined affordable housing is soon out of reach for most Washingtonians. When those making $50,000-$80,000 a year are qualifying for affordable housing, the landscape of the population soon finding themselves eligible for “affordable housing” changes to include many professionals—and raises the bar impossibly high for truly low income District residents.