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What Is Affordable Housing?

The term “affordable housing” is relative in that it has less to do with the price of a particular home in a given neighborhood and more to do with a household’s financial ability to qualify for, purchase, and maintain a home close to where they work, where their children go to school, where they worship, or simply where they would choose to live.

This the most difficult question to answer because affordability in general is so relative. It’s relative to what people earn, what they need, and what is available to them. Therefore it makes it difficult because affordable housing is not necessarily qualitatively defined. There is no magic number, which is what many people want to hear. Low income households are households with incomes less than 80% of an area’s median income.

The US Department of Housing and Urban Development defines affordable housing based on what percentage of income a family should spend on for-sale or for-rent housing needs and is based on the annual area median income (AMI). HUD suggests a family should spend no more than 30% of their annual income on housing costs.

Affordability is established by three main income tiers:

Very-low-income
50% and below of AMI

Low- Income
51%-80% of AMI

*Moderate-Income
81%-120% of AMI

*Growing number of the area population that find it difficult to find affordable housing

Who Needs Affordable Housing?

Increasingly they are gainfully employed, thanks in part to the nationwide employment shift toward a service industry economy, and unfortunately poor wages that have not kept up with escalating housing costs. They are sales clerks, child care workers, food service workers etc. They are even entry level teachers, police and administrative services.

There continues to be a significant group of wage-earners earning too little to afford the median priced home in the Charleston Metro area and earning too much to qualify for many programs that could help them become homeowners. In the community and economic development field this segment of the population is called workforce housing and refers to families earning about 80% of the area median income, but up to 120%.

The continued escalation in housing costs are slowing shutting out huge segments of the population from being able to access decent affordable housing either for-purchase or for rent.

A FAMILY OF FOUR EARNING THE AREA MEDIAN INCOME OF $55,400 CAN AFFORD A HOME PRICE OF A $166,200.

Average home price :

Charleston County
$377,039

Berkeley County
$225,518

Dorchester County
$213,935

WHAT'S CAUSING THE RISE :

• High land costs
• Increases in material/labor costs
• Zoning limitations
• Arbitrary development processes/regulations
• Development delays
• Lack and loss of supply
• Stagnant incomes
• Declining federal funding
• Lack of housing goals
• Lack of Public awareness/education

EFFECTS OF THE RISING HOME VALUES :

Positives:
• Contributes to gains in wealth
• Pivotal to economic growth- 22% of GDP growth in first 3 months of 2005
• Provides much needed jobs; construction workers to realtors to loan officers
• Promotes neighborhood revitalization and urban renewal

Negatives:
• 1 in 3 households spend over 30% of their incomes on housing, many spend over 50%
• Many families over spend on housing leaving less money for other necessities.
• Housing prices rise faster than per capita income.
• Escalating costs in energy, fuel, and amenities.
• Middle income families find it difficult to afford housing in their income ranges.
• Forced to live further out causing additional stress on infrastructure needs.

Wage/Income Chart: What Can They Afford?(.xls)

Mortgage Calculator: What can you afford?

2007 Income Limits

What's Happening in the Tri-County Housing Market?

See Beyond the Term Affordable...

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