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  • Writer's pictureJ.P. Irie

Why isn’t affordable housing . . . affordable?

How the government determines “fair rent,” where it fails, and why you suffer

 
Median income varies from city to city, even neighborhood to neighborhood. | Illustration by Khoa Tran

Half of the renters in metro Atlanta can’t afford their rent.


Atlanta is experiencing a cost of living crisis: Gentrification related to the BeltLine and other development projects has driven home prices up, we have few policy controls in place, and there just isn’t enough housing, let alone affordable housing. But that’s not the only problem: The affordable housing we already have isn’t cutting it for a lot of folks. The U.S. Department of Housing and Urban Development (HUD) sets the standard for what governments and housing programs can consider “affordable” for the average personbut that standard is leaving many renters behind. Here’s how.


First of all, let’s define “affordable.” 


HUD considers housing affordable when a person spends no more than 30 percent of their income paying for it, the reasoning being that they can then spend the rest of their income on things like food, healthcare, and transportation. Households paying more than 30 percent of their income toward housing are considered “rent-burdened” or “cost-burdened.” 


For example, if you make $3,000 a month, you should pay, at most, $900 a month toward housing, including utilities. But about a quarter of metro Atlantans spend at least half of their income on rent. By the HUD standard, then, their rent is not “affordable.” 


Households paying more than 30 percent of their income toward housing are considered “rent-burdened” or “cost-burdened.”

When HUD determines fair rent in affordable housing developments, it uses the 30 percent benchmark. But because it isn’t feasible to calculate affordability based on each household’s income, it zooms out and instead takes into account the surrounding metro’s area median income (AMI). HUD uses the AMI to determine what rent would be affordable in that area, and local agencies like Atlanta Housing refer to the standard to calculate what percentage of AMI potential renters should pay—depending on their incomes, it could be 80 percent of AMI, 60 percent, 50 percent, and so on—to live in HUD-funded affordable developments, as well as private properties with rents supplemented by Housing Choice vouchers. 


The AMI for a single-person household in the Atlanta metro is $71,500. If you’re a single person who makes around $57,200 a year (80 percent of the AMI), then—following HUD’s 30 percent benchmark—you could reasonably spend $1,430 a month on housing. If you’re a single person making $35,750 a year (50 percent of the AMI), you should spend $894 a month on housing. Public housing projects use these standards to set rent that could qualify as “affordable.” 


In Atlanta, an affordable housing complex could charge a single person more than $1,400 a month for rent alone and still be considered “affordable housing.” The average rent in the metro area fluctuates from month to month and year to year, but in recent years it’s hovered around $1,500 and $1,600. 


The average rent in the metro area fluctuates from month to month and year to year, but in recent years it’s hovered around $1,500 and $1,600. 

What’s the problem?


What’s affordable across a metro may not be what’s affordable in a specific zip code, and vice versa. William McFarland is a member of the City of Atlanta Housing Commission and part of the BeltLine’s advisory board for housing. He says the problem with calculating AMI using data from a vast area—like Atlanta’s 29-county metropolitan statistical area—is that income can drastically vary from county to county, even neighborhood to neighborhood.


AMI “includes a whole lot more people than live in a particular zip code,” McFarland said. That means a calculation like 80 percent of the metro AMI can be “totally arbitrary to somebody living in 30315,” a zip code that includes neighborhoods like Summerhill, Peoplestown, and Lakewood Heights.


Incomes vary not only across zip codes but across race and ethnicity. In 2022, the median income for non-Hispanic, non-Latino white households was about $100,000, as calculated by the U.S. Census Bureau—compared to about $74,000 for Hispanic or Latino households, and about $68,000 for Black households. 


Well, now what?


What’s considered “fair rent” in metro Atlanta (per HUD’s AMI) doesn’t match reality. At the same time, it’s the standard that government agencies, developers, and politicians use to determine what can be considered affordable housing. So what can we do?


McFarland says it would be difficult to use a different AMI for federally subsidized projects but suggested that—for its own unsubsidized projects—the City of Atlanta should limit the area defined for AMI to much smaller localities, like certain zip codes or census tracts. So, for something like the Atlanta Urban Development Corporation, which uses public land to build financially sustainable public housing without relying on HUD subsidies, the AMI used to determine affordable rent would be lower—for now.


The better response is to “use lower AMI thresholds: that is, 30 percent AMI instead of 50 percent, or 50 percent instead of 80 percent.” —Dan Immergluck, Georgia State University professor of urban studies and author of Red Hot City: Housing, Race, and Exclusion in Twenty-First-Century Atlanta

Dan Immergluck, a Georgia State University professor of urban studies and the author of Red Hot City: Housing, Race, and Exclusion in Twenty-First-Century Atlanta, says “massive gentrification” has quickly raised the city’s median income, though. “The better response is to stay using the MSA definition, which is more stable over time (won’t rise as quickly) but use lower AMI thresholds: that is, 30 percent AMI instead of 50 percent, or 50 percent instead of 80 percent,” he wrote in an email.


Josh Humphries, the City of Atlanta’s mayoral policy adviser for housing, also touted the need for deeper affordability: “My take on this is, We could spend all day arguing about moving AMIs. I’m less concerned about that, right? The question is, Are we creating housing to meet the needs of our residents?”


“We could spend all day arguing about moving AMIs. I’m less concerned about that, right? The question is, Are we creating housing to meet the needs of our residents?” —Josh Humphries, the City of Atlanta’s mayoral policy adviser for housing

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