Anyone who works in affordable housing or follows housing issues regularly probably hears the 30 percent affordability standard referred to daily. The idea that your housing is considered unaffordable if you pay more than 30 percent of your income on it is deeply embedded in many aspects of housing policy and practice.
- It’s a payment standard—the rents people in public housing or with Housing Choice Vouchers are expected to pay are set at 30 percent of their income.
- It’s a way to measure affordability of a given unit, or to set rents to achieve affordability, often in return for a subsidy—a unit is considered affordable to people making a certain income if the rent is 30 percent or less of that income.
- And it’s a way to measure our housing crisis by tracking the number of households who are “cost burdened,” or paying more than 30 percent of their income in rent.
The standard has been a lifesaver for many people. Near the end of Matthew Desmond’s best-selling book, Evicted, when one person manages to finally get into a decent apartment where the rent is limited to 30 percent of his income, it is a miracle, drastically changing his life compared to the experiences of others who are struggling with rents that eat up nearly all of their incomes for housing of marginal quality. The National Low Income Housing Coalition map that shows there is no county in the country where a full-time, minimum-wage worker can “afford” a two-bedroom apartment was so simple and direct that it has repeatedly gone viral at a time when competition for attention is fierce.
And yet, when you stop to think about it, the simplicity of the 30 percent standard is also its downfall. We don’t expect people of differing incomes or family sizes to pay the same percentage of their income in taxes—why would the same percentage work for housing costs? At the least it doesn’t make sense for very high or very low incomes.
The following collection of articles explain some of the problems with relying on only the 30 percent standard, and includes original research from three different perspectives that shows what applying a different, more accurate type of measure might mean for housing policy. The alternative approach—dubbed the residual-income method—measures whether a household has enough money left after paying for housing to meet their basic needs. This, after all, is what actually matters to those households, rather than income ratios.
- After Paying for Housing, How Much is Enough for Basic Necessities? by Miriam Axel-Lute
- The 30 Percent Standard’s Blinders by Daniel Kay Hertz
- In Defense of the 30 Percent of Income to Housing Affordability Rule —In Some Cases by Christopher Herbert, Alexander Hermann, and Daniel McCue
- Housing Need Is Even More Skewed by Income Than We Thought by Andrew Aurand
- The 30 Percent Rent-to-Income Ratio Doesn’t Add Up in New York City by Richard Heitler
- The Secret History of AMI by Jarrett Murphy
- When Deep-Income Targeting Doesn’t Hit the Mark by Tom Collishaw
However, the method presents its own very big question: How much is enough for non-housing basic needs? That is a question that our authors have chosen to answer in different ways, which affects some of their conclusions. To help you sort out these different approaches and which might make the most sense in which scenarios, we’ve compared them here.
Abandoning a quick and easy-to-apply shorthand for housing affordability doesn’t seem like a good idea, especially in an era when appetite for nuance may be lower than usual. But when we’re crafting policies and programs, incorporating more nuanced measures of actual housing need could direct our dollars to better directions. Have you employed any methods other than the 30 percent standard in your work— in setting rents or prioritizing applicants, for example? Have you wished for one?