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Published: Jan 04, 2024 7 min read
Illustration of a giant Welcome mat in-front of a House
Chris Gash for Money

Jala Rucker, a 34-year-old mother of five, has lived in Pittsburgh her entire life.

For as long as she can remember, the city 300,000-some people call home has been synonymous with affordability. Year after year, think tanks and real estate data analysts deem it “the most affordable city in America.” The city’s budget-friendly reputation is such a point of pride that the slogan "Pittsburgh: a most livable city" is stamped on its public garbage cans.

You could have fooled Rucker.

For years, she struggled to make ends meet; crying herself to sleep from the stress of trying to keep food on her kids’ plates and a roof over their heads. Rucker herself grew up in similar circumstances: In the 80s,' she and her siblings lived in government housing her mom worked tooth and nail to afford — often in units that were (and, allegedly, still are) dirty and dilapidated.

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Like most major U.S. cities, Pittsburgh has been hit hard by gentrification, and families like Rucker's have faced widespread displacement as a result. Affordability has always meant different things to different people, but over the last two generations, that chasm has widened.

Today, there's a growing disconnect between how much Americans make and how much they spend on rent, groceries and gas. And when it comes to fair-cost housing, the concept of which homes are "affordable" for low-income families is more muddled than its ever been. This ambiguity, some experts say, is fueled by the word itself.

The outdated rule shaping American housing

The metric we use to determine housing affordability was established years before Rucker was born.

Half a century ago, the Housing and Urban Development Act of 1969 forced landlords of public housing projects to cap rent at 25% of a tenant’s income. In 1981, the cap was raised to 30%.

Today, the "30% rule" is most commonly used as a guideline to help homebuyers decide how much mortgage debt they can afford to take on. If the monthly payment for the house you're eyeing amounts to more than 30% of your income, the advice goes, you should probably find something cheaper (the same logic applies to rent).

The metric also guides current affordable housing initiatives throughout the U.S., like the Section 8 voucher program, which requires renters who qualify to put at least 30% of their income towards rent and utilities, and the Low Income Housing Tax Credit Program, which gives real estate developers tax credits to build or rehab affordable apartments — i.e, units rented out for 30% or less of the area's average monthly income.

Millions of Americans depend on these programs: They’re standard practice in our country's biggest cities — from New York to Los Angeles and everywhere in between — and in smaller towns like Charleston, West Virginia and Texarkana, Texas, which each have a population of less than 50,000. And that's a big problem.

The "30% rule" is a relic of a time when Americans made more money relative to their cost of living, and carried less debt overall. In the four-plus decades since the Housing and Urban Development Act was last updated, the cost of housing and consumer goods have vastly outpaced the growth of wages.

In an area like Pittsburgh, where the minimum wage is $7.25 per hour, unchanged since 2009, thousands of residents — many of whom are people of color who have lived in the city their entire lives — struggle to stay afloat. Dave Breingan, Executive Director at the Pittsburgh non-profit Lawrenceville United, says that over 10,000 Black residents left the city between 2010 and 2020 (Pittsburgh city officials didn't respond to an email request for comment).

Another major flaw with the "30% rule" is that it tries to make personal finance universal — ignoring renters' and homebuyers' unique financial situations and obligations, and inevitably, further disenfranchising the people who need housing assistance the most.

“It doesn't account for daycare costs or medical costs, or taking care of elderly parents,” Breingan says. “It flatten[s] peoples’ experiences.”

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Redefining 'affordability'

Rucker, the Pittsburgh native, has seen this play out time and again.

Her mom's rent, pegged to her wages, left their family financially squeezed; a vicious cycle Rucker was forced to repeat as soon as she had kids of her own.

These days, Rucker works as a housing advocacy organizer, and currently serves as an education outreach manager for RentHelpPGH, a non-profit that connects residents of greater Pittsburgh with legal and financial assistance. The people Rucker advises have faced housing insecurity for generations, and rising prices are only making matters worse.

"The cost of everything has gone up," she says, "but no one's wages have increased.”

Rucker belongs to a growing group of advocates who want to reframe "affordability" to meet the reality of today's low-income households. Most of those advocates agree that the "30% rule" needs to be scrapped, and some are even working on an alternative rubric to replace it.

One popular idea, according to Andrew Aurand, senior vice president for research at the National Low Income Housing Coalition, is to factor in "residual income" — or money that's leftover after a resident's basic needs are met. When a 2022 Harvard study compared this approach to the measurement we use now, it found that millions more American households are struggling to afford a decent standard of living than current policy accounts for.

This method, "basically says, ‘let's look at a family and what they're spending on housing,’” Aurand says. “After they pay for their housing, can they afford other necessities like child care like food? If they can't, they’re cost burdened.”

For now, the 30% rubric prevails, and families throughout the U.S. continue to fight for the vital resources they need. Even in America’s “most affordable city."

More from Money:

These 22 States Are Hiking Their Minimum Wage on New Year's Day

Down Payment Assistance: These States Will Give You Money to Buy a House

How Much House Can You Afford? Many Buyers Are Ignoring a Classic Rule of Thumb

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