People often think ‘affordable’ housing is much more expensive than it
actually is, and then conclude it’s a scam to make housing for rich
people. But this is often based on a misunderstanding of how the
prices are set.
Let’s say a unit is “50% AMI” somewhere with an area median income
(AMI) of $100k. You might think, and I’ve seen a bunch of people with
this confusion, that units would rent for 50% of $100k: $50k/y
($4,170/month), but it’s much cheaper than that.
Affordable has a very specific meaning in this context: spending no
more than 1/3 of your income on housing. So you might think 50% AMI
is ‘affordable’ to someone earning at the 50th percentile: 1/3 of
$100k, or $33k/y ($2,750/month), but it’s cheaper than that, too!
Instead, 50% AMI means someone earning 50% of the AMI would be
spending 1/3 of their income on housing. This is 50% of 1/3 of the
AMI, and in this case that would be $17k/y ($1,390/month).
Now, I don’t think affordable housing solves everything: if it were
widespread I think it would
be exploited and it can be a distraction from just getting a lot
of units built, but the term “affordable housing” is actually a decent
operationalization of whether housing is something regular people can
afford.
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