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Demystifying Affordable Housing - Part 1
Monday, July 07, 2008
John Beckman | BioPosted in Business, and filed in San Joaquin County, State of California
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When you hear the term “Affordable Housing” what image do you see? Some people see duplexes and triplexes. Some people think of section 8 housing. Some people see condominiums and town homes. Some people see small lot, two story homes with little in the way of front or back yards. The truth is that affordable housing has a variety of meanings and definitions.
The state authority on housing, the Department of Housing and Community Development (HCD) discusses affordability as a relation of income level to monthly living expenses. At the lowest income levels the State categorizes households as “extremely low income” when the income is less than 30% of the median income for the area. In San Joaquin County a household bringing in less than $18,390 annually qualifies as extremely low. For housing to be considered affordable for this household the net monthly cost of housing must be less than $460 per month. Now compare this with the moderate income household with an annual income of $73,560. Affordable housing for the moderate income family is anything with a net monthly cost less than $1,840 per month. Between these two extremes are housing affordable to the very low income household at $766 per month and housing affordable to low income households at $1,226 per month. Clearly there are wide variations between housing that is affordable to the moderate income household as compared to housing that is affordable to the extremely low income household.
To add one more variable into the works you may consider the difference between affordable housing for rent as compared to affordable housing for sale. Obviously the monthly cost for renting is lower and more affordable than the monthly cost for ownership. So even going by the strict legal definition of affordable housing there are still a lot of variations.
Currently rents on a one bedroom apartment in Stockton are ranging from $490 to $750 per month depending on location and amenities. These price ranges are well within the range of affordability for low income households and are close to the range needed for affordability to extremely low income households. Given this information you could question those who cry out for more affordable housing. Digging deeper we learn the real concern about “housing affordability” has nothing to do with the ability of someone to pay rent or the availability of town homes and condos. It is really about the cost of purchasing a single family.
However, it is not the sale and purchase of the average single family home that receives attention from politicians, activists and the media. When it comes to talking about affordable housing the new home gets singled out for all the attention. See Demystifying Affordable Housing - Part 2 for more information.
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Comments
Jack Porter wrote on July 15 2008: [report]
Actually, I pay more in rent for a studio apartment in Stockton than ANY of those “prices” listed in the Stockton area. Actually, the high end rent for Stockton one bedroom apartments in at least $990-$1000. So I would say that you information, sir, is incorrect. And if you are paying for a one bedroom apt. with a rent of $490 and are not located within an affordable housing complex or within an area where a free machine gun (mountable, of course) comes with rent, then you are getting one hell of a deal.
Comments
RogueLeader wrote on July 16 2008: [report]
Affordable, yes. $490 a month is a number that a family of four, at 30% of the median income can make. But, you neglect that a family of four really doesn’t fit into a 1 bedroom studio. You further assume that there is ample supply of these $490 units and completely neglect the complete lack of desirability of this $490 unit.
Why not try this? You move into the $490 unit for a month with your wife and two children and see if you still feel the issue of Affordable Housing is not just about the availabilty of housing. Just because the unit is available, doesn’t mean the family would be worse of moving into the apartment.
It seems Habitat for Humanity has proven for all to see that when folks are given an opportunity to succeed in a quality housing unit, the entire community is made better. For our communities struggling to come together and find common ground, we dont need any more $490 units that breed crime and drugs.
Comments
Puzzled wrote on July 16 2008: [report]
I still can’t for the life of me figure out why this affordable housing is always in the poor or rundown parts of a city they’re trying to redevelop? I don’t notice any affordable housing in the nicer neighborhoods. Is that because those who legislate these issues always seem to find a more convenient place for them other than their own neighborhoods or parts of town?
Comments
John Beckman wrote on July 17 2008: [report]
To Puzzled: you ask why is affordable housing in poor parts of a city. Housing is always less expensive in poor parts of a city and more expensivie in the nice parts of a city. The price of housing is dependent on what someone is willing to pay for the housing, wouldn’t you pay more to live in a nicer area? Perhaps what you are asking about is the type of housing built not the affordability of housing?
Comments
John Beckman wrote on July 17 2008: [report]
To Rogue Leader: Good point. Housing that is available at a very low cost tends to also be very undesirable. The more desirable the housing the more expensiive it will be.
Another good point, there is not a huge supply of dirt cheap one bedroom apartments. If you build new apartments they will be nicer than the old run down apartments so they won’t be dirt cheap. But building more apartments today means that eventually as those apartments become older the price will go down so a long term solution to affordable housing is to build more apartments today.
Comments
John Beckman wrote on July 17 2008: [report]
To Jack Porter: Your prices for “high end” one bedroom apartments at $1,000 per month is correct. And the average price for a one bedroom apartment in Stockton is about $625 well above the $490 price. The $490 is the rock bottom cheapest you can find. But you can find them.
You are likely paying more for your studio apartment because you choose to live in a nicer and safer area compared to those with lower rents.
My point is that there is a variety of housing choices out there and each one comes at a price commensurate with the desirability of living there. Not everyone can afford to live on a lake, but that doesn’t mean there is not affordable housing.
Comments
Puzzled wrote on July 17 2008: [report]
Affordable housing is just another misnomer for putting lipstick on a pig. Would you send your own parents, spouse or relatives there? I think not.