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Demystifying Affordable Housing: An Essential Guide UPDATED

Long Panoramic Aerial view of the Downtown City Skyline of Charllotte NC

UPDATED: APR 5, 2023

Have you ever wondered what “affordable housing” really means? Let’s unravel the mystery behind this term and discover why it’s so important in today’s society. Affordable housing refers to residences that are budget-friendly for households with low incomes, ensuring they spend no more than 30% of their earnings on housing costs, such as rent, mortgage, and utilities. Households that exceed this threshold are labeled “housing cost-burdened,” and that’s where affordable housing comes to the rescue. Source Greenville Post

Defining “low-income” can be tricky, but it’s usually based on the Area Median Income (AMI) of a city or county. To make it simple, we can categorize households into three groups:

  1. Low-income: Earning no more than 80% of the AMI
  2. Very low-income: Earning under 50% of the AMI
  3. Extremely low-income: Earning under 30% of the AMI

Here’s a quick reference table to help you understand income limits based on household size:

Household Size 1 2 3 4 5 6 7 8 30% AMI $22,500 $25,700 $28,900 $32,100 $34,700 $37,250 $39,850 $42,400 50% AMI $37,450 $42,800 $48,150 $53,500 $57,800 $62,100 $66,350 $70,650 80% AMI $59,950 $68,500 $77,050 $85,600 $92,450 $99,300 $106,150 $113,000 Source: HUD 2022 Income Limits

Let’s zoom in on Raleigh, a city that has seen a significant increase in housing cost-burdened renters—about 47% of all renters or roughly 42,300 households—as of 2021. This is a 6.85% hike from 2016. On the flip side, housing cost-burdened homeowners dropped by 9% over the same period, representing around 16,400 households or 17% of all homeowners.

You might wonder how much income is required to rent a decent apartment in Raleigh. To rent a two-bedroom apartment at Fair Market Rent, occupants need to earn $23.52 per hour. Interestingly, Raleigh ranks as the second most expensive city in North Carolina, surpassed only by Asheville. As of May 2021, the average hourly wage in Raleigh was $28.15.

Raleigh vs. North Carolina (statewide) Fair Market Rent (FMR) for a two-bedroom apartment $1,223 $997 Income Needed to afford a two-bedroom apartment at FMR $48,920 ($23.52 per hour) $39,897 ($19.18 per hour) Sources: National Low Income Housing Coalition, 2023, U.S. Bureau of Labor Statistics

Now that you have a clearer understanding of affordable housing, you can better appreciate its significance in providing a safety net for households with low incomes. Affordable housing ensures that everyone has the opportunity to live in a decent, secure, and reasonably-priced home, fostering a more inclusive and equitable society.


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