Interesting, thanks for the history! I personally qualified for/lived in an affordable housing unit for a few years right after college. The income limit for a single person was 95k at the time
What I find interesting about many of these units is how the net effective rent is still typically 40x annual income for people in that bracket. If I hadn’t switched jobs and gotten some significant raises in the process, much of my salary would have still been going to housing in an ‘affordable’ unit.
That sounds like it is affordable and profitable if you are in the top half of incomes.
In that situation - a renter who made ~40k a year (in today's dollars - probably 30k in 1990 dollars) in 1990 could not afford a single family home and had to deal with expensive rents (because the city didn't allowed apartments buildings where there was demand).
This would be much less of an issue if there were more affordable units. It's extremely hard to find units below $500 in the US. If you could readily find units for $400-$600, many people who currently can't afford housing would be fine.
It used to be that the average monthly payment on housing would go up to around 25% of your spendable income, at least that was what the government used as a guideline. These days you need over 40% to even get anywhere and even that is unlikely to be enough. I've also noted around here the required income went from about 3-3.5 to around 5 times the rent rate despite that meaning you need a 6+ figure income for even the most basic apartments (which is rare here) which is just risk reduction for the owner.
Paying 1/3 in after tax income on rent is generally considered affordable. In the US I have gone well past that threshold. It’s why having roommates in cities is so common.
There's an important caveat, before everyone jumps on the title by itself:
> The report, released Tuesday, defines “affordable” as spending no more than 30% of monthly income on rent, in line with what most budgeting experts recommend.
The second caveat is this is rent for a 2 bedroom apartment; though they do say that it's also ~95% of 1 bedroom apartments. No comment is made on studio apartments or having roommates.
For anyone else wondering what the criteria for "affording a two bedroom apartment" is, it looks like they define it as having the yearly rent cost be less than or equal to 1/3 of your yearly income (pre-taxes).
It wasn't fun. Rent was $800 per month on an income of $1800 per month for a 2 bedroom university apartment. I was considered lucky to get such a sweet deal, since off campus housing was more money with greater commuting requirements, but graduate students all make the same amount.
Apologies- I meant to write rent. Even if their numbers include 2 BR apts, my point still stands: a single person affording rent for a 2 BR apt is not a reasonable baseline for a living wage.
Rental averages include incumbent tenancies, which is a pretty different landscape from what a newly independent young adult faces (the whole idea of rent control is to transfer housing cost burden from the former to the latter).
That said I think you could make the same argument with the same numbers you point to roommate situations rather than studios. Anecdotally, most of my fellow new-grad engineering hires at around $110k had roommates. I was unique in commuting about an hour for a 1BR.
With my student loan paid off, I could afford about $400 a month in rent for me and my two adult sons. Good luck finding decent housing (not a trailer) anywhere in the U.S. for that amount. And not because it can't be done, but because houses have grown to more than twice their average size compared to the 1950s and then the low end is basically just trailers. There is almost no middle class housing left. It is all either slum housing (I count trailers as slum housing) or housing for rich people.
Many people on the street do have an income. They just don't have enough income to afford a middle class lifestyle. I have actually studied this space in school and everything.
I see this in Seattle and it makes no sense and just annoys the shit of me when I'm looking for housing. They'll list their income restricted units as their entry level price online, then you look at their actual listings and they're all $1000 more expensive per month. The real problem that makes no sense, however, is that these income restricted units are sometimes like $2000-2500 a month. And to qualify you have to make less than like 60k a year or something. They can't afford to the rent. I don't get it.
I'd go one further and say that in some regions, a single-bedroom unit is for someone making pretty good wages. I've never known anybody on minimum wage in California not to live in shared accommodation (mostly because it's impossible).
Back in my college days I was able to live on minimum wage, including paying tuition. I knew several other people doing the same thing and even supporting a family on their income. Their housing expenses where a lot lower than you would believe possible: they lived in a tiny apartment in the bad part of time: they had a warm place (hot in summer: no AC), a dry roof, a kitchen and bathroom. We all had a cheap car, with enough money set aside to fix it as required.
Of course we were the minority. Most people live exactly at their means (including whatever they can borrow). I understand, I like more space as well: I like my toys as much as everybody. I just believed my future was better if I didn't get myself into debt now.
What I find interesting about many of these units is how the net effective rent is still typically 40x annual income for people in that bracket. If I hadn’t switched jobs and gotten some significant raises in the process, much of my salary would have still been going to housing in an ‘affordable’ unit.
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