Affordable Housing Basics
I qualified to live in an affordable housing unit, so why do my rents continue to go up?
Your apartment was financed through the Low-Income Housing Tax Credit (LIHTC) program, also known as Section 42. Section 42 rents are not based on your income. Instead, rent is capped by rules that are tied to the apartment. This means that your rent will not change even if your income significantly increases or decreases. However, rent will increase along with the Area Median Income (AMI). Rents are not allowed to increase faster than the AMI, and over time, Section 42 rents remain at 30% of the AMI for each apartment.
Area Median Income means half of the families in a region earn more than the median and half earn less than the median. The U.S. Department of Housing and Urban Development (HUD) calculates different levels of AMI for geographic areas across the country by household size.
What if I’m a senior citizen and my income doesn’t go up at the same rate as the area median income where I live?
LIHTC rents (based on AMI) and Social Security Cost of Living Adjustments (COLA) and the Consumer Price Index (CPI, a common measure of inflation), move at approximately the same rate over time. This provides rent control for LIHTC apartments – even for renters on fixed incomes because their incomes go up at roughly the same rate as rents. This connection between rent levels and inflation also helps keep properties in good repair and sustains the affordability for long periods of time.
Why is my rental apartment considered affordable housing if I might not always be able to afford it?
The goal of the Section 42 program is to encourage more private development of quality housing units to address the severe shortage of affordable homes available in the United States. The rent levels are tied to the community’s median incomes (AMI) rather than each renter’s income.
The program works. Section 42 has helped build more than 3 million housing units since it was established in 1986. Creating more housing for people with middle to low incomes drives down housing costs overall, by providing more housing supply to meet demand.
Additionally, Section 42 rules ensure that the buildings are well-maintained. Rents tied to AMI allow building management to maintain and preserve quality apartments buildings. If rents are artificially capped, building owners and manager lack sufficient funding to maintain the properties.
What can I do if I can no longer afford my rent?
The federal government has another affordable housing program that is meant to help people when they can’t afford rent. This rental assistance is known as housing choice vouchers, or Section 8 vouchers. These vouchers provide rental assistance to ensure that people with modest incomes don’t pay more than 30% of their income on housing. Vouchers are available through the local housing authority or county. There are also a variety of other community and charitable programs that can help people with lower incomes meet their rent, housing costs, and other basic living needs.
What the Experts Say
Underproduction Totals in Key States
Expert Editorial: We Need Renter Aid and More Construction
To solve the U.S. crisis, we need both direct renter aid and more construction. This editorial from the president of a Minnesota-based nonprofit developer and regional council of carpenters outlines the two primary strategies for addressing the shortage of affordable housing.
Expert Editorial: Build More Homes to Tackle High Housing Costs
The shortage of homes and apartments across the country, combined with high demand, has led to significant increases in housing costs. Housing experts, builders, and real estate experts, all agree that the lack of home construction in relation to population and economic growth is the main issue. This article focuses on the Texas Legislature and examines how low-income households are affected by the housing shortage. To address the problem of expensive homes and rents, it is crucial to construct more housing, helping reduce costs.
Expert Editorial: Homelessness is a Housing Problem
This publication from a Housing Scholar and Data Journalist explains how market conditions like cost and rental availability contribute to homelessness in cities nationwide. It highlights the variations in homelessness rates and the relationship between rent levels, rental vacancies, and regional homelessness.
Expert Editorial: Delay in Access of Vouchers for Housing
Many families and individuals who are in search of public housing and housing choice vouchers (HCVs) are encountering significant delays. This editorial focuses on the challenges associated with obtain affordable housing. To address this issue effectively, we need to expand funding for essential affordable housing programs. The expansions should be aimed at allocating additional funds to the low-income housing tax credit for both vouchers and public housing.
Case Study: The State of the Nation’s Housing
A case study by Harvard University’s Joint Center for Housing Studies provides a comprehensive update on housing markets, rental housing, and challenges related to the need for housing and limited supply.
Case Study: Advancing Health and Equity Through Workforce Housing
This comprehensive case study presents various potential solutions to address the issue of affordable workforce housing scarcity in both the Phoenix metro region and across Arizona.