*See table below on Alameda County Household Incomes by Size of Household
To be considered low or moderate income in the Bay Area means a very different thing than in most parts of the country because the income gap – the difference between the highest and lowest wages – is so wide in our region. Affordable housing here can mean that your favorite hairstylist, your child’s teacher, or the friendly medical assistant at your doctor’s office has access to below market housing so they can live close to their work.
The starting point for this calculation is the Area Median Income (AMI), the midpoint household income in a specific region, meaning half of households make more and half of households make less. Moderate income is 80 to 120 percent of the AMI, low income is 50 to 80 percent AMI and very low income is 30 to 50 percent AMI. The rule of thumb is households should expect to pay about a third of their income on housing. So what does this look like in Newark?
Moderate Income: $143,050 and up for a family of four, $114,450 and up for a family of two.
Low Income: $104,400 for a family of four, $83,550 for a family of two.
Very Low Income: $65,520 for a family of four, $52,200 for a family of two.
| Annual Income % of Area Median Income for Alameda County) | Household size (persons per household | |||||
|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | 5 | 6 | |
| Extremely Low Income (up to 30% AMI) | $27,450 | $27,450 | $31,350 | $35,250 | $39,150 | $42,300 |
| Very Low Income (30-50% AMI) | $45,700 | $52,200 | $58,750 | $65,250 | $70,500 | $75,700 |
| Low Income (51-80% AMI) | $73,100 | $83,550 | $94,000 | $104,400 | $112,800 | $121,150 |
| Median Income (100% AMI) | $83,450 | $95,350 | $107,300 | $119,200 | $128,750 | $138,250 |
| Moderate Income (81-120% AMI) | $100,150 | $114,450 | $128,750 | $143,050 | $154,500 | $165,950 |
Source: State of CA HCD, 2020
| Job/Occupation | Average Annual Wage | Estimated % of AMI for 3-Person Household | % of Monthly Income for 2BR* |
|---|---|---|---|
| Dishwashers | $31,353 | 29% | 86% |
| Retail Salespersons | $48,330 | 45% | 56% |
| Security Guards | $39,267 | 37% | 69% |
| Preschool Administrators | $65,321 | 61% | 41% |
| Police Officers | $176,367 | 164% | 15% |
| Preschool Teachers | $44,049 | 41% | 62% |
| Hair Dressers | $36,250 | 34% | 75% |
| Medical Assistants | $48,347 | 45% | 56% |
| Receptionists | $38,500 | 36% | 70% |
* Percent of monthly income needed to afford average market rent for a two-bedroom unit
Note: AMI assuming median income for Alameda County from HCD.ca.gov. Average market rent data from Apartments.com. Wage information from California Economic Development Department, first quarter 2020 Income numbers may be rounded for simplicity.
A medical assistant and a preschool teacher in Newark with two children would be in need of affordable housing with their combined average salaries of around $92,000 a year. A year’s worth of rent would swallow up at least 30% of their income, making them rent burdened.
Consider a single-earner who heads a household of four and works as a daycare administrator with an average yearly income of about $65,000. To afford rent in Newark, around 40% of their income would be directed towards housing costs.
Affordable housing refers to homes that are rented or sold at rents or sales prices that are lower than prevailing market rates. In Alameda County, the vast majority of purpose-built affordable housing is built and managed by private and nonprofit developers using a variety of funding and financing sources. Affordable housing programs generally target households who earn 80% or below of the area’s median income (AMI), which for Alameda County is $119,200 a year for a household of four. Households that pay more than 30% of their monthly income are considered “rent burdened” while families who pay over 50% of their monthly income are considered “severely rent burdened”. Many of the most common jobs in Alameda County don’t pay enough for many households to afford prevailing sales prices or rental rates, underscoring the need for more affordable housing options.
Most affordable housing is built and managed by private and nonprofit developers using a variety of funding and financing sources. It’s much more challenging to fund and complete affordable housing developments than market rate developments.
Overcrowding occurs when the number of people living in a household is greater than the home was designed to hold. There are several different standards for defining overcrowding, but the U.S. Census Bureau defines it as more than one occupant per room (not including bathrooms or kitchens). Additionally, the Census Bureau considers units with more than 1.5 occupants per room to be severely overcrowded
Affordable housing programs are generally for those who earn 80% or below the AMI, which for Alameda County is $119,200 a year for a household of four.
Seniors, families with children, people facing health challenges, people with disabilities, or those who simply are starting a new phase of life – in short, people of all backgrounds.
Affordable housing structures include a wide range of styles, types and sizes, including duplexes, triplexes, quadplexes, townhomes, granny units or ADUs, cottage clusters, and low-rise (3-4 story), midsize (5-6 story) and large (7+ stories) multifamily buildings. Affordable housing must comply with the same zoning codes, restrictions, and design standards as market-rate housing. Often, because affordable housing projects rely on some public money, they have to comply with additional restrictions and higher standards than market-rate housing.
Inclusionary housing programs connect the creation of affordable units to the construction of new market-rate development. An inclusionary housing program might require developers to sell or rent 20 percent of new residential units to lower-income residents at prices they can afford. These policies leverage the profitability of new development to pay for new affordable housing units and support the creation of more economically diverse and inclusive communities.
Newark currently has a residential in-lieu fee program which market-rate developers can pay into when they build new housing to support future affordable housing production, but the City Council has directed staff to look for ways to encourage on-site inclusion of affordable units, and to study the development of a new inclusionary housing program for Newark. This may also be a program in the Housing Element Update.
Affordable housing can often reduce crime by acting as a tool of economic development. The National Bureau of Economic Research study examined the impact of Low Income Housing Tax Credit-financed properties on local crime rates in San Francisco, San Diego, and Chicago. In low income areas of each city, there was a reduction in violent and property crime. Higher income areas saw no increase in violent crime, as well as a slight decrease in property crime.[1]
[1] Diamond, Rebecca, and Timothy McQuade. “Who Wants Affordable Housing in Their Backyard? An Equilibrium Analysis of Low Income Property Development.” NBER Working Paper Series; Working Paper 22204, 2016. www.nber.org/papers/w22204
Affordable housing can actually reduce traffic congestion by resulting in more transit-oriented housing and higher density neighborhoods where fewer car trips occur.
A 2016 study of the 20 least affordable metro areas found that affordable housing had no impact on property values. A decade prior to and after the construction of low-income housing, property values nearby and further away rose at the same rate. [2]
Typically, the most important factor that influences property values is the existing value of the land in a given community, which is based on proximity to resources and services, road/highway construction, urban/suburban expansion, and nearby large-scale commercial/industrial developments, among other things.
[2] “There Doesn’t Go the Neighborhood.” Trulia, Nov 2016. https://www.trulia.com/research/low-income-housing/
