A Shortcoming in the Method for Allocating Federal Support for Multifamily Housing

Brief

A Shortcoming in the Method for Allocating Federal Support for Multifamily Housing

September 28, 2021

Abstract

Federal policymakers’ ability to effectively increase access to affordable rental housing is handicapped by the long-standing practice of assessing affordability based on housing costs relative to the area median income and then “managing” housing costs to the share of total household income that “should” be spent on housing, producing a definition of affordable rental housing that limits costs to 30 percent of the area median income that is applied universally across nation’s housing markets, irrespective of the significant variations in costs that exist between geographies. This brief examines the unintended consequences of such an approach—including the promotion of housing segregation by income and a shortage of affordable housing in high-cost markets—and offers practical recommendations for improving the allocation of federal support for affordable multifamily housing.

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