When policymakers talk about “affordable housing,” they are usually using a very specific, and often flawed, metric. The standard definition of affordability is that a household should spend no more than 30% of its gross income on housing costs (rent plus utilities).
If you spend more than 30%, you are “rent-burdened.” If you spend more than 50%, you are “severely rent-burdened.” By this metric, about half of all renter households in the U.S. (Harvard Joint Center for Housing Studies) are currently rent-burdened.
But the 30% rule is an old administrative benchmark: federal housing law set tenant rent at 25% of income in 1969 and raised it to 30% in 1981. It was originally used to determine eligibility for public housing, not as a universal law of economics. Today, in high-cost cities, spending 30% on housing might mean living in a closet, while in a rural area, 30% might get you a mansion.
Furthermore, the metric relies on Area Median Income (AMI), which is calculated for the entire metropolitan region. In a city with a few ultra-wealthy suburbs, the AMI is skewed so high that “affordable” housing built for 80% of AMI is still completely out of reach for the actual low-income residents of the urban core.
This metric failure leads to bad policy. Cities will claim they are building “affordable” housing because it is priced at 80% of the regional AMI, while the local service workers who actually need the housing are priced at 30% of the AMI.
When evaluating local “affordable” housing projects, always ask: “Affordable to whom?” Demand that the numbers be tied to the actual median income of the specific zip code or neighborhood, not the inflated regional average. The metric should reflect the reality of the people who live there, not the statistical average of the entire metro area.