Housing is considered affordable when it represents less than 30% of income. Here is a link to the HUD discussion of affordability.
When purchasing a home, the mortgage payment (including the interest and the principle being repaid) the property taxes, homeowners insurance, and any HOA/condo fees together make up the monthly payments which, if more than 30% of the household income, is considered unaffordable.
When renting, it is rent alone which constitutes the monthly housing cost, and the 30% threshold applies.
First, we conducted a comprehensive analysis of Lincoln’s existing housing stock. To calculate the values, we use tax assessments.
Then we used the income data for Middlesex County segmented into quintiles. Then we calculated roughly how many housing units we would need at each income level.
House valuation | Existing units | Need |
<$180,000 | 134 | 313 |
$180,000-$363,000 | 189 | 258 |
$363,000-$605,000 | 241 | 206 |
$605,000-$985,000 | 456 | -9 |
>$985,000 | 1214 | -767 |
There are many housing options for households with annual incomes over $200,000 — a home purchase price over $1M, or a rental budget over $5,000.
Housing that costs less to rent or buy exists in Lincoln, but demand exceeds supply. It is scarcer as affordability increases (see Existing Housing Stock Data).
In Lincoln (and throughout the region) there is not enough construction to meet demand, and there is no incentive for the market to meet demand for lower-cost housing. The free market will continue to incentivize using housing space/resources for higher price building in desirable neighborhoods as long as income inequality persists.
Here are some existing policies and some novel approaches Lincoln could embrace.