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What do we mean when we say “Affordable”?

March 12, 2021

Affordable Housing is a fraught ecosystem. Between policy, land acquisition, financing, and construction, any effective affordable housing solution must include players from many different disciplines. The word "Affordable" comes with a lot of baggage, so we wanted to take a moment and set some things straight about affordability.

Part 1: Affordable with a capital "A"

Affordability depends on a lot of things – income, the number of people in a household, and where that household is located. Broadly speaking, households that spend over 30% of their income on housing are considered "cost burdened", so that is a good threshold for affordability. Affordable Housing is a technical term that refers to people making below a certain percentage of Annual Median Income (more on that below), but you can also talk about the affordability of housing for people of all income levels.

Part 2: The Housing Bridge

The Housing Bridge is a concept that explains housing affordability along a spectrum of income. This spans from permanent supportive housing on the low end all the way up to second-home ownership. In a booming construction economy like Bozeman’s, the housing need exists across the entire bridge.  Subsidized housing happens by way of vouchers, low-income tax credits and employer-incentivized programs. On the other end of the spectrum, the reinvigorated desire for mountainous escapes from the pandemic has increased the number of second home buyers and builders in the high-end market. Headwater's Economics has a great article on the affordable housing crisis, not just in Bozeman, but all around the country.

Part 3: The “Missing Middle”

The Missing Middle is a specific term for those making 80% to 120% of an area's Annual Median Income. It's a portion of the housing bridge that has left developers, community members, and housing suppliers scratching their heads as to a viable solution. The challenge in addressing “missing middle” housing is that the wages associated with this portion of housing are too high to qualify for any traditional or subsidized housing, but it must be separated from traditional market-rate housing. In a market like Bozeman, it makes up one of the most populated sectors of the housing market, and is applicable for both first-time homebuyers and downsizing families. Further, the language used to discuss this type of housing is often subject to semantics, between “affordable”, “accessible”, “attainable”, and “community” housing.

At our core, Foothold is focused on this “missing middle” of the housing market, partnering with Community Land Trusts, developers to meet Inclusionary Zoning standards, and homebuyer assistance programs.