Affordable housing refers to housing that costs less than 30% of a household’s income. Harvard University and Habitat for Humanity’s 2022 State of the Nation’s Housing report shows 30% of all U.S. households in 2020 had rent or mortgage payments exceeding 30% of their household income — a 1.5% increase from the year prior. The research also shows that more than 1 in 7 households paid over half of their income on housing in 2020.
Why is housing
affordability important?
It may seem obvious why housing affordability is important on an individual level.
Paying 30% or more of one’s income on housing doesn’t leave much left over to pay for additional expenses, which are growing costlier. The U.S Department of Health and Human Services Social Determinants of Health (SDOH) Literature Summaries include a section on housing quality that cites research drawing the connection between housing affordability and both psychological and physical health. For example, low-income families may be more likely to live in older homes that may be under-insulated, lack air conditioning, and cost more to heat, leaving homes too hot or too cold, which has negative health consequences.
Paying 30% or more of one’s income on housing doesn’t leave much left over to pay for additional expenses, which are growing costlier.
HIGHLIGHT
But going beyond the individual, a lack of affordable housing has ramifications for entire communities. Unaffordable housing pushes away vital members of the community like teachers, police officers, and social workers, as well as tradespeople — the backbone of society. Businesses located in these high cost of living areas may find themselves at a competitive disadvantage due to the higher wages required to attract and retain team members.
By answering a few insightful questions, you can create your ICP and better understand how to reach and communicate with potential new clients:
Why is there an
affordability crisis?
Years of underbuilding following the Great Financial Crisis of 2008 have led to a shortage of affordable homes for sale or rent. This shortage was worsened by the pandemic, as more millennials than expected formed new households, baby boomers stayed put and did not downsize as previous generations have, and new construction failed to keep up with housing demand. According to a New York Times report citing U.S. Census and Department of Housing and Urban Development (HUD) data, the U.S. now has a deficit of 3.8 million homes.
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Affordable housing trends
While the December 2022 CPI report shows that housing costs rose .8% percent in December, Apartment List data shows that property owners charged .8% less on new leases signed in December than the preceding month. According to Igor Popov, Chief Economist at Apartment List, new lease prices have been falling for the past four months, but that data will take a while to show up in the CPI estimates:
But going beyond the individual, a lack of affordable housing has ramifications for entire communities. Unaffordable housing pushes away vital members of the community like teachers, police officers, and social workers, as well as tradespeople — the backbone of society. Businesses located in these high cost of living areas may find themselves at a competitive disadvantage due to the higher wages required to attract and retain team members.