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Breaking down the types of affordable housing

By Heidi R. Burkhart, president,
Dane Professional Consulting

While the term “affordable housing” is probably not something new to you, you may be surprised by its official definition.

According to the New York City Housing Authority (NYCHA), affordable housing is based on a household’s percentage of the Area Median Income (AMI), which is set by the federal government. Housing is considered affordable if it costs about one-third or less of what the people living there make, and is regulated so the rent can’t increase dramatically over time.

Once you have that basic understanding of how affordable housing is defined and how it is implemented in cities across the globe, it is important to also understand just how many types of affordable housing exist and the differences between them. While there are sub-sectors within each type of housing, the three major types are: (1) emergency housing, (2) transitional housing and (3) permanent housing.

Emergency Housing

Emergency housing provides accommodation for short periods of time and serves people who are homeless, displaced or are fleeing violence or abuse. In most cities, shelters are synonymous with emergency housing. However, these shelters also provide tenants with resources, including everything from access to food and basic healthcare, to informal counseling and employment services.

Transitional Housing

Transitional housing serves as a bridge between emergency housing and permanent housing. It serves people leaving homelessness, leaving the correctional system or families receiving specialized support. It allows these individuals to begin rebuilding their lives in a secure environment. There is typically a specified period of time that you can stay for. The maximum duration for a stay can vary from a few months to a few years.

One common type of transitional housing is a rooming house or congregate living. Here, residents rent out single rooms and share common kitchens, bathrooms and living space. Congregate living can sometimes be a permanent option depending on the individual, but more often than not, this is used as transitional housing.

Permanent Housing

This is intended to function for an indefinite period of time without regard to unforeseeable conditions. There is no specified time period in which an individual or a family can stay. There are several different sub-sectors: supportive housing, purpose-built rental housing, cooperative housing, non-profit housing and homeownership.

Supportive housing is a type of permanent housing for people who need assistance to live independently, ie: the elderly or individuals suffering from disabilities, substance abuse, or mental illnesses. Assistance provided at a supportive housing facility includes medical assistance and counseling.

Purpose-built rental housing has been built for this purpose and offers rental units to tenants that meets affordability standards. This housing is private and owned by an individual or private company, with either the owner or a hired property manager running the building’s operations. The units that make up these types of buildings vary widely due to a number of factors, including location and condition of the building. The local housing market, in addition to these factors, will dictate the price of rent for tenants.

Cooperative housing, or “co-op” housing, provides permanent housing for individuals with low and moderate incomes. Co-ops include both subsidized units and units that cost market rent. All residents, no matter which units they occupy, contribute their time towards the upkeep of the building(s) and the governance of the co-op. Since ownership of co-ops is collective, members are empowered to make decisions about their housing, achieving greater autonomy over their housing than other affordable housing options.

Non-profit housing is composed of community development corporations and national and regional non-profit housing organizations whose mission is to provide for the needy, the elderly, working households, and others that the private housing market does not adequately serve. Within non-profit housing, most tenants pay rent that is geared to their incomes, while others pay rent that is at the low end of private market rent.
Homeownership, or owning a home, can be an affordable permanent housing option for many households since there are many different options for homes (i.e. single, multi-family, etc.), with varying levels of quality, and located in a number of different regions.

Many homeowners are creating secondary suites, which are emerging as a private-market option for affordable housing. These units are created on the same plot of land as the homeowner’s private home – think a finished basement, an upstairs floor, a room above a garage, etc. These homeowners act as the landlord and rent these units to a tenant, charging a price based on the local housing market.
There is no “one-size-fits-all” solution or type of housing. Depending on each individual or family’s circumstances, there are countless affordable housing options.

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