Housing FAQs

Whether you rent or own, the federal government considers your rent or mortgage “affordable” if it consumes no more than 30 percent of your gross monthly income. Up to 30 percent, you can make ends meet. You will still have enough left over for other basic expenses: food, transportation, clothing, medical expenses and the like. You might even save a little toward a child’s college education or retirement.

But in Rhode Island the “American Dream” of a decent home in a good neighborhood has slipped further out of reach for more working families each year. The reason? While spending on housing costs increased for homeowners and renters at various income levels, incomes have not kept pace.

We’re surrounded by Rhode Islanders who need a chance for better housing, and they’re not just those suffering from chronic homelessness. For example, clerical workers, restaurant workers, tourism industry staff, retail industry workers, bank tellers, and daycare providers typically don’t earn enough to afford market rate rents. In fact, many industries include positions that simply do not pay enough for those workers to afford average rents in Rhode Island.

Long-term affordable housing exists to fill the chronic gap between income and housing costs that impact many Rhode Islanders. Having an adequate supply of long-term affordable housing in each Rhode Island city and town helps ensure that these workers can shop at local markets, eat at local restaurants, and fully participate in their local economy.

Affordable housing is also critically important for people on fixed incomes like the elderly and people with disabilities. These residents need rents that they can afford now and that will remain affordable over time.

Despite some easing in real estate prices, the gap between wages and income needed to afford a median-priced home in Rhode Island still persists, even for skilled labor. In 2019, a household earning the state’s median household income of $63,296 would be able to affordably buy in only one of Rhode Island’s cities and towns.

Providing affordable housing opportunities to our state’s workforce is an important step toward ensuring that Rhode Island remains a competitive place to live and work. All business sectors need clerical and office workers, entry-level workers, young professionals. These are all populations that are affected by the lack of affordable homes – both rental and home ownership.

People who qualify for long-term affordable homes are just like you and me, and already live and work in your community. Clerical workers, restaurant workers, tourism industry staff, retail industry workers, bank tellers, and daycare providers typically don’t earn enough to afford market rate rents. Most industries include positions that simply do not pay enough for those workers to afford average rents in Rhode Island. This is especially true for a region like Washington County that relies so heavily on tourism. Having an adequate supply of long-term affordable homes in your town will help ensure that these workers can shop at local markets, eat at local restaurants, and fully participate in your local economy.

Affordable housing is also critically important for people on fixed incomes like the elderly and people with disabilities. These residents need rents that they can afford now and that will remain affordable over time.

All communities need good quality housing that is affordable to a wide range of residents. 10 percent is a benchmark established in the Low and Moderate Income Housing Act (RIGL: 45-53). The 10 percent goal was seen as an achievable threshold for communities to meet, but the actual need for long-term affordable housing exceeds 10 percent in every Rhode Island community. Typically households earning 80 percent or less of the area median income could qualify for long-term affordable housing. The adjacent map shows the percent of households in each community that earn 80 percent of the area median income or less, and could subsequently qualify for long-term affordable housing.

Homes that are affordable in today’s housing market are vulnerable to the market pressures of tomorrow. For example, from 2001 to 2003, home prices in Rhode Island appreciated faster than anywhere else in the U.S. The housing market became unaffordable to many working families throughout the state. When housing prices crashed in 2009, more affordable homes may have become available on the market, but these homes are still subject to dramatic housing price increases as seen in the last decade.

Long-term affordable homes remain affordable for at least 30 years, ensuring housing options for those unable to pay market rate prices. This is especially important in today’s rental market. While the median sales price of single family homes has declined in many communities, rental prices remain high. In 2014, a household earning the state’s median renter household income of $30,437 could not affordably rent the average priced 2-bedroom apartment in any Rhode Island city or town. In fact, by 2013, more than half (51 percent) of Rhode Island's renter households were burdened by their housing costs.

Long-term affordable housing requires a subsidy because it costs more to build or rehabilitate these homes than the price they can be rented or sold to low- and moderate-income Rhode Islanders. Affordable housing is created through a combination of public and private resources. Because the housing is guaranteed affordable for decades beyond construction, long-term affordable homes are built to high standards that are meant to last and fit into the character of the neighborhood.

As with any home, there are regular expenses associated with upkeep and maintenance. In market rate rental housing, these expenses can be transferred on to tenants with rent increases. But with long-term affordable housing, rents must remain at a level that is affordable to the tenant. A subsidy for long-term affordable homes allows rents to be set at a level that is both affordable for low-income renters and sustainable for owners.

Affordable homes are taxed according to their value, just like every other property. The difference is that the value of these homes is less than similar market-rate properties because the affordable home is deed restricted and required to stay affordable for at least 30 years. Essentially, if the owner of an affordable home wants to sell it, they must sell it at a price that is affordable to someone with the same income. This deed restricted price limits the value of the property.

In a similar way, the value of affordable apartments is limited by the rent that tenants can be charged. Properties that can command very high rents have a greater value than properties that can not. In market-rate rental housing, when property taxes increase, the owner of the property can pass the additional expense on to the tenants in the form of a rent increase. But because the rents on affordable apartments must remain at a level that is affordable to low-wage earners, owners of those properties are unable to pass increases in property taxes along to tenants. In recognition of this constraint, state law limits the rent that can be charged on affordable apartments to 8% of the gross rents that these developments take in. This law ensures that these properties can provide a sustainable supply of high quality rental apartments for their lower-wage residents.