What exactly is affordable housing? Is it all public housing?  And who lives there?

Affordable housing is often used to describe housing that includes a public subsidy. This includes public housing, as well as new units built with tax credits or local funding and targeted to people who earn less than 60 percent of the median income for the county in which they live. The design of these buildings is indistinguishable from market rate housing. The people who live in affordable housing include low-income seniors, workers (e.g., janitors and childcare providers), and people with disabilities.

Casa Adelante-2828 16th Street is affordable housing for households earning 30-60% of median income for San Francisco. Photo Credit: Bruce Damonte & TNDC

But affordable housing can also refer to lower-cost market housing — sometimes called “naturally occurring affordable housing”. These are units that landlords price below market rents at rates affordable to low-income households, and can also include units that are covered by rent control.  

In the Bay Area, only a small share of homes are deed-restricted affordable housing. In fact, today the Bay Area has among the smallest share of deed-restricted affordable housing in the industrialized world. Much affordable housing is not permanently affordable. Instead these units are temporarily restricted and if covenants are not extended, affordability may expire and the housing may reset to market rate.

Naturally occurring affordable housing is under even greater risk of loss: when tenants move or are evicted, the owner can raise rents to market, and in the hot Bay Area real estate market, lower-cost properties are often bought by investors and flipped into higher-end condos. When this happens, it can displace low-income tenants and put them at risk of homelessness.  

The loss of affordable units — both subsidized and lower-cost units — makes it even harder to ensure there’s enough affordable housing for lower income families. Currently, there is a shortfall of 207,618 affordable housing units across the nine counties.

Another challenge is that affordable housing is not necessarily affordable to extremely low income households, which are at the greatest risk of homelessness. An affordable unit may be set at affordability for someone making 50 - 80% of the area median income (think an emergency medical technician or a retail manager), but a cashier or farm worker making 30% of the area median income would still find this “affordable” housing unit well out of reach. 

Source: Plan Bay Area 2050         

The solutions to the lack of affordable housing are to produce more of it and to preserve what we already have. In the Production section of this Issue Brief, we will talk more about developing new housing, including affordable housing. Here we will focus on Preservation. 

Housing preservation is the acquisition and rehabilitation of existing properties to either make what was a market rate property into an affordable one, or to preserve existing affordable housing. A nonprofit, city government, or a community land trust can purchase and preserve such buildings as affordable, but they face off against speculative buyers who often come with deeper pockets looking to profit. 

Actors looking to preserve affordable housing need help to compete in the market. Supportive policies are one tool. For example, guaranteeing the right of first offer or first refusal so that nonprofits, the city or tenants have time to match a leading bid has been effective in protecting affordable housing, especially when paired with financing to subsidize the purchase. Washington, DC implemented such a policy in 2002 and since then has saved 3,500 housing units. San Francisco enacted the same policy in 2019 and Berkeley and Oakland are considering similar policies. 

Housing preservation can have a more rapid impact on preventing displacement and homelessness than building new housing by making use of existing housing stock to make it more affordable to our neighbors who need it most. There are several approaches that philanthropy can support. We are most interested in:

• Supporting nonprofits to acquire and refurbish existing housing for permanent affordability, particularly for deeply affordable housing that reaches extremely low-income households.
• Funding community land trusts. These are nonprofits or cooperatives designed to ensure permanent housing affordability and community investment by stewarding land and property in perpetual trust for low-income communities. 
• Advocacy for policy that supports the preservation of affordable housing.