Narrow or Broad Affordability?

When people talk about affordability, they often use a narrow definition which only considers current housing affordability for very low income households, but there are good reasons to use a broader definition that considers middle- as well as low-income households, transportation as well as housing costs, and future as well as current cost burdens (see table below).

Narrow Versus Broad Affordability Analysis

Narrow

Broad

Target populations Homeless and low-income households that spend more than 30% of their budgets on housing Low- and moderate-income households that spend more than 45% of their budgets on housing and transportation
Time perspective Current Current and future
Costs considered Rents or mortgages Rents or mortgages, heating/cooling, maintenance, property taxes and basic transportation
Solutions Preserve and subsidize cheap housing for low-income households Build lots of moderate-priced housing units in walkable urban neighborhoods.

 

A narrow definition favors policies that preserve and subsidize cheap housing. A broader definition tends to supports policy reforms allow much more development of moderate-priced housing ($200,000-600,000 per unit) in walkable urban neighborhoods. Even if the new units are initially too pricey for lower-income households, they increase affordability through filtering, as some lower-priced housing occupants move up to the moderate-priced units, and over time as they depreciate and become cheaper.

The broader definition expands the political appeal of pro-affordability policies. Preserving and subsidizing cheap housing only directly benefits the lower-income households that are lucky enough to receive those units, and some strategies, such as inclusionary zoning, which requires developers to sell some units below market prices, can harm middle-income households by driving up housing prices. However, policies that allow more affordable infill development and improve non-auto transport options directly benefit both low- and middle-income households, as well as improving public health, reducing pollution and supporting local economic development.

A broader affordability definition offers something for everybody, and so expands the scope of potential political supporters. In this case, broad is better than narrow.

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