WHAT DOES “AFFORDABLE HOUSING” MEAN?

Henry Sniezek

It was once said by a guy who ran for President in 2012, “the rent is too damn high.” And, for many, it still is. The current consensus is that housing in Durham and in many portions of the country is not “affordable.” But, what does “affordable” really mean? This short piece will review what “affordable housing” generally means to our government(s) and also the private sector housing industry. 

THE 30% RULE

Emerging from public housing regulations in the late 1960s and early 1970s was a standard that no more than 30% of gross income should go towards housing costs. Specifically, it was the Brooke Amendment (federal HUD legislation) passed in 1969, which capped public housing rent at 25% of income, later adjusted to 30%. The 30% standard generally includes rent or mortgage payments (principal and interest), and utilities (e.g. water, sewer, electricity). Sometimes, depending on the program or policy, property taxes, homeowner's insurance, and homeowner's association dues may be included in the total housing expense calculation. 

INCOME CATEGORIES

Affordable housing programs and policies often focus on the following income categories:

• Very Low Income (households earning up to 50% of the area median income)
• Low Income (households earning between 50% and 80% of the area median income)
• Moderate Income (households earning between 80% and 120% of area median income)
• Workforce Income (sometimes defined in overlap or similar to Moderate Income, but also known to reference households earning up to140% of area median income)

The definitions and percentages above are often used but they may vary by program or policy.  For instance “very low income” has been used to mean up to 30% of area median income.

The meaning of “area” may vary by program or policy as well, and be defined as a city or county boundary, a census block, zip code, neighborhood, or other defined geographic area. 

“Household” usually means people living together sharing common living arrangements and expenses in one housing unit. Housing assistance programs often issue a yearly chart of median income for differing household sizes. Often, a household size of 4 persons is used to describe data and findings in reports and assessments about housing affordability in communities. 

COST BURDENED

“Cost Burdened” is frequently used in housing affordability assessments to describe households that spend more than 30% of income on housing.  “Severely Cost Burdened” usually means households that spend more than 50% of income on housing. 

HOUSING & TRANSPORTATION

In areas (such as dense downtowns) that offer a significant and viable range of transportation options in addition to the automobile, such as light rail (e.g. subways), buses, and other multi-modal choices (including walking), affordable housing policy makers may consider an “affordability” rule-of-thumb higher than 30% of household income. The rationale is that the availability of multiple non-auto transportation choices can lower overall expected transportation costs, and therefore open up additional income for housing. The Housing and Transportation Affordability Index, developed by the Center for Neighborhood Technology, suggests a benchmark of 45% of income for housing and transportation costs. For example, if an average of 10% of household income is used for transportation in dense multi-modal areas, then a benchmark of 35% of income for housing costs may be acceptable. 

DURHAM DATA

21.3%         -    Cost Burdened Mortgage Holders 2023

                          (Source: Durham Neighborhood Compass)

45%            -    Cost Burdened Renters 2023

                          (Source: Durham Neighborhood Compass)

$79,501.     -   Median Household Income 2023

                          (Source: US Census)

$408,600. -  Median House Sales Price - February 2025

                          (Source: Realtor.com)

$1,895.       -   Average Rent - March 2025

                          (Source: Zillow)