If you’ve listened to any discussion about affordable housing, invariably you’ve heard the phrase “80% of AMI” (Area Median Income). Rarely does anyone take time to explain how that actually translates to cost. The basic premise is that a household should only spend 30% of their income on housing. By capping the rent or home cost, people in those income brackets should be able to afford the rent or mortgage.
Example: A one bedroom apartment capped at 80% AMI means a single individual can make up to $58,450. 30% of that is $17,535. That breaks down to $1,461.25 a month rent. For a 2 bedroom apartment and a family of 3 that increases to $75,150 or $1,878.75 a month.
As the cap is increased, the question becomes where is market rate and should government be subsidizing the development? If an average market rate 1 bedroom apartment is $1800-$2000 a month, why would the city subsidize 120% AMI which comes out to $2,190 a month? Could market rates outstrip AMI in the future? Debatable.
| Household Size | 30% AMI | 60% AMI | 80% AMI | 120% AMI | 140% AMI |
|---|---|---|---|---|---|
| 1 | $21,950 | $36,500 | $58,450 | $87,600 | $102,200 |
| 2 | $25,050 | $41,700 | $66,800 | $100,080 | $116,760 |
| 3 | $28,200 | $46,950 | $75,150 | $112,680 | $131,460 |
| 4 | $32,150 | $52,150 | $83,450 | $125,160 | $146,020 |
One response to “Area Median Income (AMI) and Affordable Housing”
[…] Item 32 is another uninspired use of city land handing it over to a developer to build a single family home for infill housing at 140% AMI. […]