Housing

UPL 304 Planning Principles II

(Housing and Social Planning)

Instructor: Dr. Abdellatif Qamhaieh

Department of Urban Planning

Spring 2011

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Overview

• How is affordability defined and measured?

• Who is impacted?

• What has caused reduced affordability and how can we create more?

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Affordability Defined

As defined by the U.S. Department of Housing and Urban Development (HUD):

A household is to spend no more than 30% of gross income on housing costs: – Renter: rent plus utilities

– Homeowner: mortgage (principal & interest), property taxes, property insurance, utilities

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Affordability Defined • Household: all people who occupy a housing unit as

their usual place of residence (excl. those living in group quarters such as dorms and institutions)

• Gross income: income of each member of the household that is 15 years and older (incl. wages, social security income, retirement income)

• Utilities: all utilities (payments to ADDC), not telephone.

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Affordability Defined

• Housing cost burdened:

If spending more than 30% of gross income on housing

• Severely housing cost burdened:

If spending more than 50% of gross income on housing

Question: What is missing in these numbers?

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Affordability Defined

Source: U.S. Bureau of the Census 2004

Percentage of Renter-occupied Units Spending 30 Percent

or More of Gross Household Income on Rent and Utilities

Percentage for Florida is 50.5%

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Affordability Defined

• Housing Affordability Index: Developed by the US Department of Housing and Urban Development (HUD) to understand the conditions of home-ownership nationwide

• The affordability index looks at the relationship between the median income in the area, and the median income required to qualify for a mortgage.

• An affordability index of 100+ indicates that a household with a median income could afford to buy a house of a median price.

• It is greatly affected by interest rates.

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Affordability Defined New affordable housing index:

Housing and Transportation Affordability Index by Brookings Institution (housing costs + transportation costs) / household

income

Housing and transportation are two largest household expenditures

Impact of transportation costs on affordability of housing choices • High cost of fuel

• Lack of public transit options

• Increased need to drive 2/20/2012 8

Who is Impacted by Lack of Affordability?

Paying too much and/or living in poor quality housing: • Single-parent families • Welfare recipients • Minority households: labor and housing market inequities • Elderly: limited and fixed incomes, and special needs • Persons with disabilities • Homeless: individuals and families; hidden homeless • Rural households: more likely than urban dwellers to live in

inadequate housing

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Issues Faced by Cost- Burdened Households

• Less financial resources for other basic needs such as food, transportation, education, health care (incl. insurance), clothing

• Living in substandard and/or overcrowded conditions

• Less stability for children

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Affordability and Income Most severe housing cost burdens are experienced by

lowest income people

Source: National Low Income Housing Coalition, 2004 2/20/2012 14

Income Classification • To determine a household’s eligibility for

housing subsidies, many government programs set income limits

• These income limits are tied to the Area Median Income (AMI), which HUD calculates annually for each metropolitan and non-metropolitan area

• AMI is the benchmark to classify each household based on income level, household size and location – see chart

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Income Classification

• Major income categories:

– <30% of AMI: extremely low income

– 30-50% of AMI: very low income

– 50-80% of AMI: low income

– 80-120% of AMI: moderate income

Example:

To be eligible for a public housing unit, a household’s income cannot exceed 80 percent of AMI

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Important Questions • Should the government be responsible for providing housing

assistance for the poor? To what extent?

• Do you think the UAE government does a good job in providing housing for the lower-income segments of the society?

• Is housing assistance a form of socialism?

• Is it better for the groups from different socio-economic backgrounds to live in the same areas?

• Who do you think benefits the most from housing assistance programs?

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Reduced Affordability

• Median cost of a new single-family home in the U.S.:

1982: $60,300

2002: $187,500

► Increase of 170%

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Reduced Affordability What are the causes of reduced affordability for

housing in UAE ?

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Creating More Affordability

What governments can do to create more affordable housing?

• Inclusionary zoning and density bonuses

• Public education and awareness

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