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What exactly is the "AMI" that's used to determine affordable housing prices?

By Virginia K. Smith  | February 7, 2017 - 9:59AM
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If you've ever perused affordable housing listings in New York City, you've likely noticed the term AMI, or Area Median Income, getting tossed around. (As in, a note that apartments are priced at 60 percent of AMI.) But what is this all-knowing metric that determines the price of city housing?

As we've written previously, AMI is a number determined by the Department of Housing and Urban Development (HUD), laying out the median incomes for different household sizes. (You can see the current New York numbers here.) And like so many other things policy-related, in theory, AMI is a straightforward metric, and in practice, things get more complicated.

In New York, these numbers are based on income data from the entire New York metro area, which includes suburban areas like Long Island and Connecticut, a fact that some critics say artificially raises New York's AMI. However, it would seem HUD does make a good faith effort to calculate the numbers as accurately as possible.

Per this Housing and Urban Development fact sheet, their most recent calculations, taken in 2012, were made using data from the 2005 to 2009 five-year American Community Survey, in an effort to decrease reliance on Census data, which is only taken once a decade and can grow outdated quickly as economic conditions shift.

"It's nice to see that our government is a little more up to date on this than we might think sometimes," says Heidi Burkhart of affordable housing developer Dane Real Estate.

Based on the AMI set out by HUD, affordable and middle-income housing developments then set their income requirements based on a percentage of that number—for instance, 60 percent of AMI is the cutoff for developers to receive the low income tax credit, so you frequently see rentals charging rents geared towards households in that income bracket. (The general rule of thumb is that 20 percent of a building's units will be rented at the lower AMI, hence the term "80/20" buildings for new developments with an affordable component.) 

But given that many of the city's lower-income neighborhoods earn a small fraction of the New York metro area's all-encompassing Median Income, there's been a push from affordable housing advocates in recent years for developments to cater to incomes at a lower percentage of AMI. On its own, Area Median Income is a useful measuring stick for housing data. But it's up to city policymakers and developers to use it effectively.

 

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