What is AMI?
By Sarah Weber
With the fundraising goal met for P.E.A.C.H, we wanted to begin a limited blog series explaining some of the challenges associated with housing in today’s economy. There are a multitude of misconceptions surrounding the need for affordable housing and it is time to debunk those.
To start out, it is important to discern what affordable housing is and the communities that it serves. Many people making minimum wage or slightly above cannot afford to live in the area that they work in due to rising housing costs. This is inherently unjust as essential workers to our community are forced to make long commutes daily to go to work.
The Department of Housing and Urban Development (HUD) suggests that no more than 30% of an individual’s income should be used for housing. In the grand scheme of things, this may not seem like a significant metric, however, for individuals working a job that pays less than a living wage, this number is significant.
To further understand this crisis that we are living in, it is important to understand what Area Median Income (AMI) is. AMI is a metric used to determine a specific area’s income distribution (Hamann 2023). According to federal standards, low income classifications are as follows: individuals earning 80% AMI are considered Low Income, individuals making 50% AMI are considered Very Low Income, and individuals that make 30% AMI are considered Extremely Low Income. AMI is used as a determinant for several housing related policies, yet, people don’t realize how many people live in these low income classifications.
North Carolina minimum wage and Federal minimum wage are both set at $7.25/hour. Although the living wage can vary from area to area, the North Carolina living wage for a single adult without children is $16.83/hour (MIT Wage Calculator 2023). This number only increases with family size and of course varies throughout the state.
Let’s look at a hypothetical example to see the reality that we live in. John Doe works as a cashier making $7.25 an hour full time and lives alone in North Carolina. If he works 40 hours/week, he will make roughly $15,080 per year. North Carolina AMI is set at $87,000 per year, leaving John Doe to make an income that is 17% AMI.
Now it is time to take into account John Doe’s living situation. As previously mentioned, HUD recommends only 30% of income be spent on housing. When looking at his income this means that he would need to spend $4,502 annually for rent or $375.20 per month. In 2021, the fair market rent price in NC is $674/month for a one bedroom apartment (rentdata.org 2021). That leaves a disparity of $298.8/month for John Doe and forces him to spend 54% of his income on housing alone. With inflation, this number has increased in the past two years only furthering this disparity.
As you can see, this is clearly an unjust situation and is the reason why we are in a serious affordable housing crisis. Not only that, but the supply of affordable housing is not able to compete with the demand as inflation rises and the situation worsens.
Individuals all around us are in need of affordable housing. Hourly wages cannot compete with rising housing costs leaving many people unable to find a place to live near their place of work.
It is for these reasons that EMPOWERment Inc. has been working on creating the P.E.A.C.H Apartments. Too many individuals in the Orange County community are faced with the challenges of finding affordable housing. Individuals deserve to have access to affordable housing close to where they work. The P.E.A.C.H Apartments will be affordable, debt free, and close to public transportation providing a living space for individuals making less than a living wage.
In the coming weeks we will be discussing other subjects related to affordable housing and how EMPOWERment Inc. and P.E.A.C.H are working to make a difference.
Work Cited:
Hamann, J. (2023, June 5). What is area median income (AMI)?. HUD Loans. https://www.hud.loans/hud-loans-blog/what-is-area-median-income-ami/
Living wage calculator. Living Wage Calculator - Living Wage Calculation for North Carolina. (n.d.). https://livingwage.mit.edu/states/37
North Carolina Fair Market Rent for 2021 Accurate Rental Price Data. 2021 Fair Market Rent in North Carolina | RentData.org. (n.d.). https://www.rentdata.org/states/north-carolina/2021