Making housing happen takes people willing to stand up, speak out, do what it takes to make housing equity a reality. Just getting started? In this section you will find resources to learn more about this complex issue.
When Is Housing Considered Affordable?
Generally housing is considered affordable when an individual or family pays no more than 30% of their income on housing costs, including all utilities. This is the widely excepted definition promoted by the Department of Housing and Urban Development (HUD), but is best utilized as a guide rather then a rule. Many factors determine a family’s ability to make ends meet alongside housing costs, such as family size, age of children and income sources. Additionally, security deposits, upfront rental payments, moving costs, commuting costs, utility deposits, etc all further complicate the issue. Someone who spends more than 30% their income on housing would be considered ‘cost burdened’ by housing, while spending more than 50% would be considered ‘severely cost burdened’.
Our Focus
To be consist with other housing organizations HSN has adopted Area Median Income (AMI) values as defined by HUD as the basis for most our metrics. These values are also sometimes referred to as Median Family Income (MFI) and to understand more about where this number is derived and what is describes read our Measures of Median Incomes and the Implications for Housing in Jefferson County.
HSN focuses its affordable housing efforts on what is often referred to as the “Missing Middle” or as we more specifically define as individuals and families making between 80% and 150% the area median income. For families of four this equates to approximately $59,100 to $110,800 or adjusted for single wage earners, approximately $41,400 to $77,600. This demographic often earns too much to qualify for assistance from other housing organizations or government institutions, but earns far too little to afford most market rate housing options.
“Our local housing solutions will require wide community involvement, and each of us who are interested in getting involved have different interests, gifts and talents we might be able to bring to bear on those solutions.” – Outreach Housing Action Team Member
What Is Affordable For Local Workers?
For 2022, the area median income for Jefferson County was projected at $73,900 and in 2023 the state minimum hourly wage increased to $15.74. The graph above illustrates the limit for what is affordable for individuals and families of different income levels in Jefferson County. Up to 150% AMI includes most members of the local Jefferson County workforce including, among many other, the nonprofit, hospital, maritime, service and hospitality sectors.
*AMI for single wage earners is derived from the family household value using a factor of .7.
*Home purchasing range is based on a 30 year mortgage financed at 6.5% with a 5% down payment and a private mortgage insurance rate of .85%. Payments include estimated property tax and estimated home insurance, and assume excellent credit and no other debt obligations. Median Home Price was captured from RocketHomes.com
Median home prices have continued to drift beyond what most local families can afford. The graph above illustrates in purple the gap that exists between local wages and the ability families have to buy homes in Jefferson County. Even if a family making 150% AMI stretches their budget to the maximum allowable debt-to-income ration of 42% they are still almost a $100,000 short of the 2022 median home price of $614,000. And this is without taking into account other debt obligations or less than excellent credit. Without significant savings or outside financial support, a family in Jefferson County would have to earn at least $130,000 in order to even consider financing a house purchase of median value under cost burdened conditions, or earn $187,000 to keep costs within the affordable range. These correspond to 175% and 253% AMI respectively.
Fair Market Rents
Each year HUD publishes Fair Market Rent values. Fair Market Rent is the rent amount, including utilities (except telephone), to rent privately owned, existing, decent, safe and sanitary rental housing of modest (non-luxury) nature with suitable amenities.
How Many Units Do We Need?
Unfortunately there is not an easy target to present here. Different types of housing options and mechanisms to keep some of them affordable are important pieces of the puzzle. Jefferson County and particularly Port Townsend is a desirable place to live and this is no secret. Demand for housing units in our area have continued to increase and we don’t expect it to lessen. Factors such as climate refugees, remote workers, vacation home purchasers, wealthy retirees and others increase competition for homes, drive up prices, and ultimately displace existing members of the workforce, and make it difficult to attract new ones.
An updated housing needs assessment is something that would greatly help the community hone in on the amount and type of housing we need to help address this problem. The 2015 Port Townsend Housing Element speaks to many of the same problems that have only escalated since. The last assessment performed by Jefferson County was completed in 2006 and was the data utilized in the Housing Element of the 2018 Jefferson County Comprehensive plan.
An argument can also be made that our housing problem is actually more of an equity problem. The latest American Community Survey (ACS) data available for both Jefferson County (2018) and Port Townsend (2021) suggest that there is over 40% more bedrooms than people in Jefferson County. Exploring ways to redistribute resources we already have in a way that is beneficial to everyone, is another important strategy to addressing this problem. Some examples of this are promoted though our Share Our Spaces campaign, including Home Sharing and downsizing into an ADU in order to rent the primary residence.
How Does Housing Become Affordable?
Housing can be affordable in two main ways: naturally occurring and subsidized. Naturally occurring affordable housing (NOAH) is when the market offers housing (rental or homeownership) that meets the income thresholds of the area’s residents. This is primarily accomplished when costs of living (rents, housing prices) are compatible with median wages. However, NOAH are completely susceptible to free market forces, so as housing demand and wages shift so does the amount of affordable housing. Unfortunately, far too often NOAH is in substandard conditions and far from job centers and amenities, forcing a greater dependence on car transportation and longer travel times. Housing can also be made naturally more affordable through smaller units, tiny homes, boarding houses and other creative models that drive down housing costs.
Subsidized affordable housing is housing that is made available at below-market rates through the use of government subsidies, private donations, developer incentives, deed restrictions, community land trusts, or other mechanisms. Sometimes these mechanism are only successful in preserving affordability for a limited duration of time (upon first sale or for 50 years), others attempt to realize permanent affordability. Subsidies can be made directly to individuals as they are with Section 8 vouchers – a federal program, administered locally through the Peninsula Housing Authority, that covers the difference between what a renter can afford to pay and a unit’s “fair market value”. They can also come in the form of grants to organizations and local governments as is the case with our local Habitat for Humanity of East Jefferson County and the City of Port Townsend’s Evans Vista Project. Developer incentives can look like density bonuses, waived utility hook-up fees or reduced property taxes in exchange for affordable housing units. Deed restrictions can theoretically include any stipulation not barred by state or federal law, including clauses stating the home buyer must occupy the home, be employed in geographic area, have an income under a certain threshold, or accept a prescribed formula for setting a home value appreciation ceiling. Community Land Trusts typically are non-profit organizations that assume ownership of land and enter into a low cost lease with the home owners. The improvements upon the land (house, etc) can be bought and sold, but because the land ins not included in the sale, prices are often much lower. This model is actively being pursued by local Olympic Housing Trust.
