Affordable Housing is government subsidized housing for low income individuals and families. Funding for this type of housing comes from the US Department of Housing and Urban Development, or HUD. The most common type of Affordable Housing is the Housing Choice Voucher Program, commonly referred to as Section 8. With this program, residents apply for vouchers and, if approved, the voucher is used to pay all or part of the rent. The balance that is not paid by the voucher is the tenant's responsibility. HUD also allocates funds directly to state and local governments based on an allocation formula for the improvement or development of Affordable Housing. Residents are typically renters, but there are also programs to assist home buyers. Rental rates and sales prices are set at HUD mandated levels as well as by local state affordable housing programs according to formulas based on median family income levels in the area. Product types for affordable housing range from single family homes to multi-family apartment buildings. Within an affordable housing development, the number of studios, one bedrooms, two bedrooms, etc., can also be regulated to meet certain product mix requirements. Single family developments will often follow the New Urbanism approach and incorporate higher density, smaller units as well as walk-ability and access to local transportation. Often-times, affordable housing units are interspersed within a market rate development or property as mandated by local jurisdictional zoning and housing code.
Information on this page provided courtesy of Cornell University Baker Program in Real Estate
Affordable Housing is an important sector within real estate. Poverty is a major issue in the United States and people who fall into this category will continue to need housing. The revenues derived from building affordable housing typically do not create profitable projects and without government assistance, would never be built. The successful development of Affordable Housing depends heavily on the work of government programs such as HUD to provide funding. Local jurisdictions also play a large part by incorporating affordable housing requirements for new projects and partnering with private developers to provide creative financing such as Low Income Housing Tax Credits.