According to economists, housing is “affordable” it if costs no more than 30% of a family’s income. For instance, a family making $100,000 a year can afford to put $30,000 a year into rent or into house payments and taxes; a family making $25,000 can afford $7,500 a year ($625 a month). If you’ve looked at the rental ads in the Twin Cities area recently, you can understand that many people live in housing that is technically not affordable to them. They may have to pay 40 or 50% of their income for rent or for house payments plus property taxes.

For some people, spending more than 30% of their money on housing may be a choice. If their income is high enough or their family small enough, they can pay 50% for a house or condo and still have enough to live on well. But for many people, it’s not a choice. The Twin Cities simply doesn’t have enough houses and apartments affordable to people on the lower end of the income scale. Obviously, every home is affordable to someone. When housing advocates speak of the lack of affordable housing, they are referring to housing for people who earn 50% or less of the area median income.

The median annual income for the Twin Cities metropolitan area is about $75,000, so people at the 50% level have a household income of about $37,500. People earning 30% of the median income (about $22,500 annually) are considered to have extremely low income. This group includes those earning the minimum wage, those working part-time, and elderly people on a fixed income. They may have to pay more than 30% of their income for housing—if they can find housing at all. Paying too much for housing cuts into a family’s ability to enjoy other aspects of life. It also puts them in a precarious position. A little bad luck or misjudgment can tip the scales and result in their becoming homeless. The city of Minneapolis is expecting a large growth in population over the next 20 years and has encouraged housing development. Houses, and especially condos, are going up all over the city.

The challenge is to make sure that this housing is affordable to a wide range of people, so that families of every income level can find housing without having to pay more than 30%.