What is affordable housing?

I assure you that it is not cheap shoddy housing like we see in places like 22nd Avenue in Cimarron Court in Northwest Rochester.  That as it turns out is very expensive housing, just ask our law enforcement agencies.  (And yes, I realize some good people live there, I have met them.)  In order to better understand what affordable housing is we must define it.  I have said many times that cheap housing is never affordable housing.  In order to consider the total costs of home ownership, I propose we look at a HEAT Index.

Here is something I have been kicking around.  What do you think?

Better understanding the total costs of home ownership to an individual or to a local government requires a holistic look at all associated costs, not just upfront costs.  Without any analysis we all understand how a failing crime ridden neighborhood places incredible long term burdens on a community.  Despite homes being built for low upfront costs, long term costs may escalate due to higher crime rates, high maintenance, energy, and transportation costs.  There are some who defend this style of construction, calling it affordable.  As a community we can see that this isn’t true.

If we truly care about serving those in need of affordable housing, we must understand the real costs associated with affordable housing and seek to minimize total costs, not just construction costs.  There is no more certain way to ensure someone remains in poverty than to permanently saddle them with high maintenance, energy, and transportation costs.  Car ownership should never be a necessity for those most economically struggling in our society.  We can do affordable housing in such a way that we actually improve surrounding areas.

I propose to analyze the true long term costs of affordable housing to the resident or community using a H.E.A.T. Index.  While the upfront cost of the housing (H) (mortgage payment or rent) needs to be considered, that is only 1 of the 4 major components.  It is also the most stable component as it relies almost entirely on construction costs and financing rates.  In order of importance this might be the H.T.E.A. Index, but that just doesn’t role of the tongue quite as easily…

One of the most volatile components to housing is energy (E).  Energy codes have come a long way in the last 25 years, but there can still be huge difference between the best and the worst of construction.  In general, multifamily housing will always be more efficient than single family detached housing.  Further the location of housing will also determine whether gasoline costs will be significant or non-existent.  Many households just barely making it might face increases in energy costs that exceed their very slight disposable income as gasoline prices inevitably hit more record highs.  While fuel economy standards began to rise in 2008 for the first time in a generation, it will be many years before significantly more efficient vehicles reach those struggling to make it.  Besides costs for gasoline, those with limited income will also be faced with changes in electricity and heating costs.  For the previous 3 years the real costs of these energy sources have actually gone down, but that will not last forever.  If we utilize proper locations and design, the real energy costs to affordable housing can easily held to a sliver of total housing costs.  However if we ignore this it can place a volatile burden on the users of “affordable” housing.

With any property ownership there are other associated costs (A).  In some cases this may be in the form of an association fee but more commonly this show up as maintenance.  Here we have an often ignored cost that is usually inversely correlated with the upfront housing costs (H).  The cheaper you build it, the higher the maintenance costs will be.  Using interior and exterior materials that are designed to last no more than 10-15 years will lower the upfront price take but actually make the total costs increase.

In addition to associated costs that pertain to the resident, in many cases it may be appropriate to also examine associate costs to a city or other taxing authority that may be contributing to the cost of a project or may absorb costs as a result of a development.  Upfront contributions may be by way of building or subsidizing new infrastructure such as roadway, water, sewer, or stormwater infrastructure.  Absorbed costs may include disproportionately high public safety costs as a result of a failing neighborhood.

The final component of examining the true cost of affordable housing is transportation (T).  Over the last decade public agencies have started to factor in the cost of transportation into the true cost of affordable housing.  Most medium to large sized cities have the transit capacity to effectively locate affordable housing in places that will seek to almost entirely eliminate this expense.  By focusing affordable housing in mixed use, mixed income, transit oriented areas we can better seek to create an environment where resources and opportunities are present without the need for expensive transportation options.

By examining the total Housing, Energy, Associated, and Transportation costs we can make a better determination as to whether or not housing is truly affordable.  Many developments that claim to offer affordable housing in fact do not.  Other developments that appear to be far more costly may actually offer truly affordable housing.


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