What Is “Affordable Housing”?

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SENA’s Phase II Neighborhood Revitalization Program plan includes money for educating the neighborhood about affordable housing issues. The staff of SENA News will periodically use the newsletter to do that, either with informative articles such as the following or with invited articles from people involved in those issues.

When SENA conducted a survey about three years ago, one of the top reasons that respondents gave for choosing to live in the Standish and Ericsson neighborhoods was that the housing was affordable. But what does “affordable” mean? According to economists, housing is “affordable” it if costs no more than 30% of a family’s income. For instance, a family making $100,000 a year can afford to put $30,000 a year into rent or into house payments and taxes; a family making $25,000 can afford $7,500 a year ($625 a month). If you’ve looked at the rental ads in the Twin Cities area recently, you can understand that many people live in housing that is technically not affordable to them. They may have to pay 40 or 50% of their income for rent or for house payments plus property taxes. For some people, spending more than 30% of their money on housing may be a choice. If their income is high enough or their family small enough, they can pay 50% for a house or condo and still have enough to live on well. But for many people, it’s not a choice.

The Twin Cities simply doesn’t have enough houses and apartments affordable to people on the lower end of the income scale. Obviously, every home is affordable to someone. When housing advocates speak of the lack of affordable housing, they are referring to housing for people who earn 50% or less of the area median income. The median annual income for the Twin Cities metropolitan area is about $75,000, so people at the 50% level have a household income of about $37,500. People earning 30% of the median income (about $22,500 annually) are considered to have extremely low income. This group includes those earning the minimum wage, those working part-time, and elderly people on a fixed income. They may have to pay more than 30% of their income for housing—if they can find housing at all. Paying too much for housing cuts into a family’s ability to enjoy other aspects of life. It also puts them in a precarious position. A little bad luck or misjudgment can tip the scales and result in their becoming homeless. The city of Minneapolis is expecting a large growth in population over the next 20 years and has encouraged housing development. Houses, and especially condos, are going up all over the city. The challenge is to make sure that this housing is affordable to a wide range of people, so that families of every income level can find housing without having to pay more than 30%.

Not much building is currently going on in the Standish and Ericsson neighborhoods, but that will change. Recently, Providence Place (3720 23rd Ave. S.), a skilled nursing facility, has announced that it will build a senior assisted-living facility across the street (in what is now a parking lot) and that it will reserve 25 units (out of a total of 63) for seniors with incomes below 50% of the area median. The new facility will give seniors the option of staying in the neighborhood when they sell their homes, and the lower-cost units will help to keep the Standish Neighborhood an affordable place to live.