Melbourne–Affordable Rents Under the U.S. System

Hello,

In this post I’ll present what rents and income limits in Melbourne would look like if they were based off the U.S. system.  In the U.S., most affordable housing limits and definitions revolve around the Area Median Income.  This is the median rent among four person families (a throwback to the 60s!).  In Melbourne, this is $85,448.  This income is then multiplied by a set of factors to produce a median income for each size of household:

        Number of Persons In Household–Area Median Income
1 2 3 4 5 6 7 8
Median $59,842 $68,390 $76,939 $85,488 $92,327 $99,166 106,005 112,844

This is done in recognition of the fact that households of different sizes have different financial needs.  The ratios used are based on data gathered by the U.S. government, although they have not been updated in a while…  It is entirely possible the relationship between household size and income in Australia is quite different.  Do these seem fair to you?

Eligibility to participate in affordable housing depends on how your household income compares to the median for a household of the same size.  In the United States, public housing and the most generous public assistance go to households deemed “Extremely Low Income” (ELI), or those making less than 30% of their respective median.  These are the upper income limits for falling into that category in Melbourne, you would only be eligible if your income fellow below these limits:

 ELI Number of Persons In Household by ELI Income Limits
1 2 3 4 5 6 7 8
Below $17,952 $20,517 $23,082 $25,646 $27,698 $29,750 $31,802 $33,853

The next segment of the population served by affordable housing are in a category called “Very Low Income” (VLI), or those making between 30% to 50% of the Area Median Income.  To be eligible in Melbourne, you would have to fall in between these bandwidths:

 VLI Number of Persons In Household by VLI Income Limits
1 2 3 4 5 6 7 8
Above $17,952 $20,517 $23,082 $25,646 $27,698 $29,750 $31,802 $33,853
Below $29,921 $34,195 $38,470 $42,744 $46,164 $49,583 $53,003 $56,422

The last segment of the public eligible to participate in most affordable housing programs in the U.S. context are those considered “Low Income” (LI).  These are households with incomes between 50% and 80% of Area Median Income.  In Melbourne, this would be:

 LI Number of Persons In Household by LI Income Limits
1 2 3 4 5 6 7 8
Above $29,921 $34,195 $38,470 $42,744 $46,164 $49,583 $53,003 $56,422
Below $47,873 $54,712 $61,551 $68,390 $73,862 $79,333 $84,804 $90,275

Does your household fall into any of this categories?  If it does, and you participated in an American housing construction program of any kind, your rents would be set at a statutory maximum of 30% of your income.

These statutory limits as applied in Melbourne, at a weekly rate, are here:

Max Rents By Income Group and Number of Persons In Household
1 2 3 4 5 6 7 8
ELI $112 $128 $144 $160 $173 $186 $199 $212
VLI $187 $214 $240 $267 $289 $310 $331 $353
LI $299 $342 $385 $427 $462 $496 $530 $564

What do you think, Melbourne?  Does this approach seem fair?

One thing I will say is that making this work in Melbourne may require mixing apartments at these rents into buildings that also cater to those at or above median incomes, with the difference paid for through support from the government.  But more on that in a future post…

Published by mattdpalm

Doctoral Student UC Davis USDOT Graduate Eisenhower Fellow 2014-2015

One thought on “Melbourne–Affordable Rents Under the U.S. System

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