The National Federation of Democratic Women argues that affordable housing is a basic human right but remains out of reach for many low-income families due to flaws in how affordability is currently calculated. Affordability is based on Area Median Income (AMI), which averages incomes across entire regions including wealthy suburbs, placing housing costs above what many central city residents can afford. AMI also ignores racial disparities and disadvantages large families. The organization calls for reforming or replacing AMI with a system like public housing, which sets costs based on household income only.

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In Support of Affordable Housing
The National Federation of Democratic Women (NFDW) strongly
supports safe, affordable housing as a basic human right regardless of
income or circumstances. However, despite many years and multiple
programs to address the issue, affordable housing remains elusive for many
low-income families.
Homelessness and a shrinking housing base available to poor and low-wage
workers has been a major problem for decades because of the way
“affordable housing” is calculated. Unless there is a deliberate effort to
recalculate how affordable housing--one of the most basic human needs--is
calculated, progress will continue to elude those most in need.
Area Median Income
Eligibility for affordable housing is currently calculated based on
measurement of the Area Median Income (AMI). Unfortunately, AMI works to
the detriment of most inner-city households which generally have lower
incomes than those of their surrounding suburbs. By combining the higher
median income of suburbs in a metropolitan area with those in the core city,
the net effect places affordable housing outside the reach of many central
city families, which is where most of the low-income housing is concentrated.
Congress must apply pressure on the administration through direct political
action to reform or remove AMI as the Department of Housing and Urban
Development’s (HUD’s) standard operating procedure.
Why Change Is needed
Affordability is calculated based on the Area Median Income, which
fluctuates from one geographic region to the next because AMI is the
midpoint of all household incomes in the region, meaning half earn more

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than the median and half earn less. Therefore, what is considered “deeply
affordable” in one region does not hold true across the board. Wealthy
suburbs where incomes are higher often surround central cities and this
lumps the wealthy in with the lowest income residents. As a result, the
average is not an accurate representation of incomes for all of the area’s
residents. In fact, it places low-income residents at a significant
disadvantage. When developers, politicians and nonprofits refer to affordable
housing, they mean housing that is affordable to households earning a
certain percentage of AMI.
There are other problems associated with using AMI to determine
affordability:
● By grouping an entire region’s population together, AMI ignores racial
disparities that have resulted from centuries of housing and economic
discrimination against minorities and the poor.
● Relying on the AMI to set affordable housing rents leaves behind
everybody earning less than the targeted percentage of the AMI.
Because of racial disparities, those left behind are more likely to
be poor, low-income people of color, as well as immigrants,
refugees, seniors, and the disabled.
● Another problem with AMI is that it discriminates against large family
sizes. The greater the number of bedrooms, the higher the rent. So,
if two families have the same income, the larger family will be
charged higher rent. Defining affordable housing in this way is
problematic.
Public Housing vs “Affordable Housing”
A better way to provide affordable housing already exists in the form of
public housing. Public housing always meets the definition of affordable
because it is income-based. Unlike AMI-based housing, it creates housing
for the homeless, senior citizens, poor, and low-wage workers. However,
innovative techniques for developing diverse, well-maintained housing units
and communities will have to be created. Congress must urge the
Department of Housing and Urban Development to redefine AMI to slow the
creation of homelessness in inner cities and make “low-income” housing
affordable to poor and low-wage workers.

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Highlights:
● Area Median Income, or AMI, is the midpoint of all household incomes
in a region, meaning half of all households earn more than the median
income and the other half earn less.
● “Deeply affordable” units are set at 30% of AMI.
● Residents whose incomes fall below the 30% threshold qualify for
deeply affordable housing.
● Public housing always meets the definition of affordable, even if a
household earns less than 30% of AMI.
● AMI discriminates against larger families because the greater the
number of bedrooms, the higher the rent, thereby costing more for
large families regardless of income.
● Basing housing affordability on AMI contributes to the declining
housing stock available to poor and low-wage residents.