This post was originally published at The Cost of Living Project
How the government determines “fair rent,” where it fails, and why you suffer
Half of the renters in metro Atlanta can’t afford their rent.
Atlanta is experiencing a cost of living crisis: Gentrification related to the BeltLine and other development projects has driven home prices up, we have few policy controls in place, and there just isn’t enough housing, let alone affordable housing. But that’s not the only problem: The affordable housing we already have isn’t cutting it for a lot of folks. The U.S. Department of Housing and Urban Development (HUD) sets the standard for what governments and housing programs can consider “affordable” for the average person—but that standard is leaving many renters behind. Here’s how.
First of all, let’s define “affordable.”
HUD considers housing affordable when a person spends no more than 30 percent of their income paying for it, the reasoning being that they can then spend the rest of their income on things like food, healthcare, and transportation. Households paying more than 30 percent of their income toward housing are considered “rent-burdened” or “cost-burdened.”
For example, if you make $3,000 a month, you should pay, at most, $900 a month toward housing, including utilities. But about a quarter of metro Atlantans spend at least half of their income on rent. By the HUD standard, then, their rent is not “affordable.”
Households paying more than 30 percent of their income toward housing are considered “rent-burdened” or “cost-burdened.”
When HUD determines fair rent in affordable housing developments, it uses the 30 percent benchmark. But because it isn’t feasible to calculate affordability based on each household’s income, it zooms out and instead takes into account the surrounding metro’s area median income (AMI). HUD uses the AMI to determine what rent would be affordable in…
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