About Affordable Cohousing

30%The purpose of Affordable Cohousing is to increase the number of homes that are affordable for the 50% of the population that earns less than the median income.

Not government-subsidized rental housing, but ownership housing. Rental housing is not (and never has) provided housing security.

The word affordable as used by the Department of Housing and Urban Development (HUD) is misleading. It offers developers incentives to sell 10% of the housing units they build for 20% less than the market price, or 80% of the median house price in a specific geographic area. That requirement doesn’t measure the income necessary to purchase that house. There is no correlation. Not even an effort to produce a correlation.

The largest nationwide listing of home sales reported that the typical house price in the US in 2020 was $293,349. Using the typical mortgage financing scheme, that would require an annual income of at least $65,000 to cover all housing costs with 30% of one’s income: the standard used by most economists and financial planners for affordable housing.

Not Rentals, Ownership

The public housing strategy of HUD has been to support those in the bottom half of the population with rental housing. Either with large projects that limit rentals to those under a defined income limit or to provide housing vouchers that allow them to rent on the open market with the government ensuring the gap between the ability to pay and rental rates.

Bookcover for EvictedAmerican sociologist Matthew Desmond found that low-income households were spending more than 50% of their income on housing, some even 70-80%, and 90% was a number not unknown. In Evicted, Desmond analyzes how this affects the health, relationships, education, and employment in households that with secure housing would be strong and successful.

In 2019 almost 70% of all Americans had less than $1,000 in savings. 45% had nothing.* For these households, renting is the only option. But the average monthly rent for a two-bedroom apartment in 2020 was $1,468. The hourly wage required to afford this ranges from $14 an hour in Arkansas to $37 in California. (The higher-wage states also have the highest housing costs.)

The average minimum wage in 2020 was $7.30. There is no state in which a minimum wage worker could afford the rent for an average two-bedroom apartment by working 40 hours a week.

This rental housing strategy for the bottom half has only perpetuated the flow of wealth to the top while providing substandard housing to those who have no other choices. The great family fortunes were made in real estate, wholly or partially.

Why Cohousing?

Logo of Cohousing Association, USA
Housing-secure communities are also stable. Cohousing communities are cooperatively owned and managed clusters of houses or multi-household buildings designed to encourage strong social networks and maintain affordable communities. To encourage diversity, they include a variety of home sizes that may range from studio apartments to four-bedroom houses. All the communities are self-governed, self-managed, and owner-occupied.

The purpose that unites them is creating environmentally responsible housing for people of all incomes and ethnicities by replicating the neighborhoods developed organically in cities and towns with multiple generations and lots of children.

Once established, cohousing communities have been overwhelmingly successful. They are financially and socially stable. Developers are increasingly interested. Even neighborhoods that launched zoning fights against new cohousing communities have been appreciative and supportive after the community is built and inhabited.

So why not build more affordable cohousing?

In the beginning, 1980-2000, cohousing could only be built by households with incomes sufficient to build without conventional financing and with the social connections and experience to influence town planning boards. Zoning restrictions typically allowed only single-family homes in residential areas and required a minimum lot size. Some lot minimums are several acres.

These external requirements set the limits for cohousing. Only residents with above-average incomes could clear all the hurdles—people who knew how to confront city officials and had sufficient personal funds for high down-payments. Since the development process was 2-5 years they also had to be able to afford to live in one house during the uncertain process of building and financing another.

As a result, cohousing is dominated by market-rate housing affordable only for those with incomes higher than 50% of the median salary.

What Might Affordable Cohousing Be Like?

The goal that cohousing has not been able to achieve is the inclusion of a wide range of affordable homes. They include a wider range than most neighborhoods but zoning restrictions prohibit building lower-cost housing.

Some communities have included a few government-subsidized units or homes donated by Habitat for Humanity but the vast majority of homes in cohousing communities are market-rate. Creating communities that are truly diverse and available to all income levels has been elusive.

The purpose of Affordable Cohousing is to explore wider possibilities, serve as a center for sharing ideas and strategies,  and encourage new communities to achieve the initial dream.

Switchplate Dingbat

Related Posts:

Why Not Rent?

Renting and Owning Both


*Except where otherwise noted, the statistics on Affordable Cohousing are from public sources like Statista, an independent, global source of statistics and data related services for business.