What does it mean to say housing is “affordable”? Let’s begin at the beginning.

What Does Affordable Housing Mean Philosophically?

At the most basic level, housing is “affordable” if, after you pay for it, you still have enough left over to cover the rest of your basic expenses. Of course this is finicky to measure, because what constitutes “enough for basic expenses” can be a matter of opinion. Also, different households have different kinds of expenses (for example, medical expenses, larger families, or transportation costs based on location).

The 30 Percent Rule

Because the meaning of “enough” varies so much, we have established a proxy—we consider housing to be affordable to the people living there if that household spends no more than 30 percent of its income on it. This rule is not relevant at income extremes—the very rich could obviously spend more than 30 percent of their income on housing and still have plenty left over, while below a certain income threshold no housing expense will leave enough to meet basic necessities. However, though it is arbitrary and doesn’t always tell the whole story, for a fairly wide income band the 30 percent rule lines up decently well.

The rule explains whether a given home is affordable to a given household. But it still doesn’t tell us what is meant when someone says they are “building affordable housing” somewhere (or preserving it, or creating it in existing buildings). In that case, the first question to ask is “affordable to whom?” The next questions are “available to whom?”, “made affordable how?” and “affordable for how long?”

Affordable to Whom?

With no other qualifications, “affordable housing” in the United States typically refers to housing whose cost is affordable to households that make somewhere between 40 and 80 percent of the area median income.

Below 80 percent of AMI is how the U.S. Department of Housing and Urban Development officially defines “low income”—but be careful about making assumptions.

Read the full article about affordable housing by Miriam Axel-Lute at Shelterforce.