WHAT IS AFFORDABLE HOUSING?

It’s a question that often gets asked. What do we mean when we talk about “affordable housing”? And what exactly is “deeply-affordable” housing? As you’ll see, the federal government has a definition that it, and most everyone else, uses. But there are other “affordable housing” calculations that factor in to discussions about housing in HUB West Baltimore. All of the definitions are important to understand.

Federal Definition

The federal government - specifically the Department of Housing and Urban Development (or HUD) - defines Affordable Housing as “housing on which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities.” This is a key number for many projects that use federal funding at least in part for affordable housing creation and preservation.

State of Maryland Affordable Housing, as Defined by HB1239

MD State House HB1239 “Appraisal Gap” bill provides for a 35% subsidy for developers renovating vacant houses and selling them as affordable housing. In that bill, affordable was defined as a scenario in which “monthly housing costs do not exceed 30% of a household’s income, where the household’s income does not exceed 80% of the statewide median income for a household of like size.” Maryland median household income for a family of four is around $95,000. So 80% of that would be $75,000. A further 30% of that would be around $20,500 per year, or $1,900 per month. So that’s how much total monthly housing costs must not exceed - $1,900. All in with other housing costs, that pencils out to a house cost no more than $250,000 - the max “affordable” for Maryland.

“Deeply-Affordable”

“Deeply affordable” is how we refer to housing that’s affordable to households earning 80% or less of the median income in Baltimore City alone. In Baltimore, that’s 80% of median income is roughly $52,000 per year (for a family of four). 80% of that annual income is approximately $42,000 per year in income. That pencils out - when 30% of income is allocated to housing costs - to being able to afford a house costing no more than $160,000 after subsidies - an admittedly difficult benchmark for developers to meet. Clearly, lots of subsidy is needed. And one of the best ways to subsidize that affordability is by ensuring developers get the land cheap.

“Workforce” Housing”

“Workforce housing,” meanwhile, is a term usually homes priced for households earning at least 60 percent of AMI, or $30,000 (for a household of one). Baltimore City housing code breaks affordability down even further into “extremely low, very low, low and moderate”.

HB 1239 & the Neighborhood Homes Investment Act

HB 1239 is a bill - among several - with tremendous possibilities, in a city with both a wealth of vacant properties, and a great need to put in place affordable housing. Some general calculations reveal that the bill would be helpful in creating what it defines as “affordable housing”, but only partially helpful in creating what we define as “deeply affordable” housing.

Lastly, the US Senate Cardin Neighborhood Homes Investment Act bill is another potential avenue of subsidy at the federal level.