When I explain to people around just what the technical definition of affordable housing is, they scoff, “impossible!”, “you can’t build anything for that!”, and my favorite, “affordable by who’s standards?”.
Despite this disbelief, here is the definition of affordable housing…
Affordable Housing | CMHC
What is the common definition of affordability? The cost of adequate shelter should not exceed 30% of household income. Housing which costs less than this is considered affordable. However, consumers, housing providers and advocacy organizations tend to use a broader definition of affordability.
The generally accepted definition of affordability is for a household to pay no more than 30 percent of its annual income on housing. Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care.
The definition I used in a recent article came from Demographia, which states that…
The international standard for affordable housing, is that the purchase price should not exceed more than three times the gross annual household income.
This is a little easier to get a grasp on, as it breaks away from mortgage rates, the term of the loan and taxes.
Community and Affordable Housing
There is a distinct correlation between affordability and the level of community in a given area, but it’s not as simple as that. It doesn’t work to have all affordable housing in one subdivision, often that will create a ghetto effect where there is a lack of social diversity. There have been many examples of poor planning practice that have created islands of low-income housing surrounded by regular subdivisions.
Diversity needs to be built into a community with mixed housing types and cost-models. A truly diverse community is one where you couldn’t tell the household income just by looking at the house. There are many barriers to affordable housing, not least of which is the cost of building it in the first place, but that’s for another post.