C is for Clarifying the Calculation, Part II: Reality Check
In our last article we looked at the AMI, Area Median Income, and learned that the AMI for Lake County is $62,900 ($30.24/hour based on 40 hours/week, 52 paid weeks/year). Pop quiz: what does ‘median’ mean? It’s not the average; it means that half make more, half make less.
Median income drives the entire conversation on affordable housing. Pop quiz: What does the term ‘affordable housing’ mean? It means that no more than 30% of gross household income is spent on rent/utilities or, in the case of home ownership, PITI (principle, interest, taxes, and insurance). Why? Because everyone needs room in their budget to pay for other expenses.
Using the chart below, we see that someone earning the median income for Lake County would be able to afford the Fair Market Rent (FMR) for housing. What about those earning less than the median? Let’s walk through those numbers. The chart is based on the following details:
- Florida’s 2019 minimum wage is $8.46
- The Fair Market Rent (FMR) is from the National Low Income Housing Coalition’s (NLIHC) annual Out of Reach data for housing costs in zip code 32757 (at the site, click on the zip code for detailed information)
- The 1 BR and 2 BR columns show the difference between the affordable, 30% housing number (what you’d ideally pay) and the actual Fair Market Rent
- Income is pre-tax, based on 52 paid weeks/year at 40 hours/week, no overtime
How does paying more than 30% affect the rest of someone’s finances? Let’s look at three theoretical budgets for a single person renting a one bedroom home. We’re using percentage allocations commonly recommended by professional planners. Are you ready to see what those earning less than the median income are dealing with?
For Jasmine and her six-year-old daughter, the dream of owning a new home began with an email from The Villages Charter Schools. For the students at the high school, they began building those dreams a year earlier.
The Villages Charter School, in The Villages, Florida, had just launched their Construction Management Academy and had assembled an advisory committee that included industry experts to help steer curriculum for the new academy. Don McGruder, CEO of RoMac Lumber and a member of the advisory committee, suggested the academy partner with Habitat for Humanity which then began working with the high school to hammer out the details of a partnership as soon as possible.
The following year, an email looking for applicants to participate as the home owner landed in Jasmine’s inbox. “I remember when I was chosen for the opportunity,” said Jasmine. “I was super excited and I’m still trying to wrap my mind around it.”
Jasmine’s daughter Carmen was overjoyed as well. “She was literally jumping for joy,” Jasmine said of her daughter’s reaction to being told they were getting a home of their own. “She’s excited about finally having a backyard.”
As for the students participating in the Construction Management Academy, they were excited about the opportunity to give back to the community while preparing for employment or advanced training in the building construction industry. The academy’s curriculum, which is a credit course for the students, outlines opportunities to learn everything from basic use of hand tools, plan reading and rough carpentry to more advanced concepts such as site preparation, estimating and knowledge of codes, regulations and sustainability issues relevant to the construction industry.
The academy’s students have had hands on involvement with everything except for plumbing, HVAC, and electrical work which must be done by licensed professionals. Even so, they were able to observe those trades being performed in a live environment and were presented with speakers and other learning opportunities to increase their knowledge of those trades.
Jasmine learned some new skills as well by helping with painting and the installation of the home’s dry wall. And, while her daughter was too young to help in the construction, they were both able to meet some of the young men helping them realize their dream. They have a great group of kids working on the house,” said Jasmine. “It’s amazing to see what these young men have accomplished.”
The mother-daughter duo gets to see those accomplishments on a near daily basis. “They’re ahead of schedule and we’re closing in April,” said Jasmine who takes Carmen to check on their new home every day after school. Jasmine also noted Carmen’s excitement at seeing all of the young kids playing in their future neighborhood. “I’m excited because now we’ll be in a new neighborhood and I can make new friends,” shared Carmen.
The partnership with The Villages Charter School has been such a success that Habitat for Humanity is already in the process of selecting a home site on which to work with the academy next year. Habitat is also extending the program into Leesburg where it plans to partner with Leesburg High School on a similar program.
As for Jasmine and Carmen, they are planning on celebrating their move with both of their birthdays in June. “We’ll be having a housewarming party with some friends and family as well,” says Jasmine. But Carmen has much bigger plans. “In June, for my birthday, I’m going to have a mermaid slumber party with all my friends and cousins!” Surely a place and time for new dreams to come true.
By David Larrick
RoMac Lumber and Supply’s Match for March continues in 2019 with an unprecedented offer; in the month of March all donations will be matched, dollar for dollar, up to $20,000 and will benefit the Youth Construction Academy of Leesburg. Those interested in donating during the Match period can do so by going to www.habitatls.org/give or by mail to 900 Main Street, Ste 210, The Villages, FL, 32159.
Leesburg High School students will begin their Youth Construction Academy program in August 2019. Partnering with Habitat for Humanity Lake-Sumter, selected students will get the hands-on training of building a home from the ground up. Students who have entered the Youth Construction Academy in their Junior year will learn safety standards, plan reading, basic rough carpentry and framing; along with many other subjects that are necessary in the construction field.
During their Senior year, the students will take what they’ve learned in the classroom and spend a daily class period at a live construction site. Hands-on training of the techniques and safety standards previously learned will be applied as students practice concept reinforcement and acquire a certificate of completion that can be used when pursuing higher education or entering the workforce. By the end of the student’s senior year they will have the finished product of their labor standing in front of them, a brand new affordable home. Students will be invited to join the dedication ceremony, meeting the Habitat family that they built this home for.
“Don Magruder, CEO of RoMac Lumber, has been a longtime supporter of Habitat for Humanity Lake-Sumter and our mission of providing housing for all. As the president of the construction academy advisory board at Leesburg High School he is eager to invest in the students,” says Danielle Stroud, Director of Development. “The construction advisory board wants this program to be the best in the state…so we are going to work to ensure that is a reality.”
RoMac’s Match is a limited time opportunity to double your impact for double the cause! Build a safe, affordable home in the community and invest in skillful education for our students, while building foundations in the community that will benefit home ownership and the future of our workforce for years to come.
With the success of its 14-home community for veterans in Umatilla and the introduction of small cottage-style homes, Habitat for Humanity of Lake-Sumter is moving ahead with its next project — a 23-unit “pocket neighborhood” for seniors in Tavares.
The community will be built on a vacant three-acre lot near Mansfield Road and County Drive.
“The city has been extremely supportive and unanimously voted to approve the development,” said Kent Adcock, chief executive officer of Habitat for Humanity of Lake-Sumter. “And they’ve been very supportive of the concept we’re trying to advance.”
Any conversation about affordable housing must begin with AMI, Area Median Income. In this article we’ll explore this term in more detail to make sure we’re all on the same page. In Part II, we’ll look at a sample budget to illustrate the impact of housing expense on various income levels. Ready to dive in?
By ‘Area,’ we mean the MSA, or Metropolitan Statistical Area. The MSA is quite useful. It captures all manner of data for a given geography so anyone—employer, government agency, job candidate, hospital, etc.—can compare apples and apples. (Or, since this is Florida, oranges to oranges.) For example, economic development groups, transportation analyses, labor market studies, and of course, the housing industry will all be working from the same information to write policy, design long-term plans, public works projects, and so on.
Here’s a great definition of the MSA from Investopedia.com: “Metropolitan statistical areas usually consist of a core city with a large population and its surrounding region, which may include several adjacent counties. The area defined by the MSA is typically marked by significant social and economic interaction. People living in outlying rural areas, for example, may commute considerable distances to work, shop, or attend social activities in the urban center.
There are almost 400 metropolitan statistical areas in the United States. In contrast to micropolitan statistical areas, which center on towns and smaller communities with populations below 10,000, metropolitan statistical areas must include a city with a population of at least 50,000.”
Our local Habitat for Humanity affiliate is covered by two MSA’s: Lake County is part of the Orlando-Kissimmee-Sanford MSA, while Sumter County is in The Villages’ MSA. The MSA data drives the income calculations for any affordable housing program.
‘Median’ isn’t the same thing as ‘average.’ Here’s how the Census Bureau defines it: “Median income is the amount which divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount.” So, for your area (MSA) of interest, imagine lining up every household, from poorest to richest. The household in the exact middle would represent the median for that MSA—half make less, half make more.
In the very simple example below, the total household income for the area is $394,850. With just 7 homes, that means the average income is $56,407. However, the median, or the point at which half make more, half make less, is $62,900.
|One home at each income||Total Income|
And how is an area’s income figured out to begin with? It starts with the Census Bureau; each year they contact “over 3.5 million households
across the country to participate in the American Community Survey. When you respond to the survey, you are doing your part to ensure decisions about your community can be made using the best data available.” (Learn more about the ACS here). The ACS includes income data.
Once that data is available, HUD gets to work. They use the data to calculate the median income for each geographic area based on how strong the data is. If it’s deemed statistically reliable, they can run with that for the year; if it’s not statistically reliable, for whatever reason, they’ll work on a combination of surveys and formulas…and it gets complicated. To see the process in detail for Lake County, Florida, check out their calculation process here.
From this process, HUD announces the AMI for a given area. That number will then be used for different types of affordable housing programs (rentals and purchases) across the country. Our Habitat affiliate generally uses the USDA’s mortgage program for eligible home owners, so we use their AMI charts. The chart below is what Habitat would look at. (This data is extrapolated from the USDA’s site for 2018.) Remember, the median means half the residents earn less, half earn more.
If you’re fact-checking the calculations, you’ll see they don’t match up exactly. For example, using Lake County’s AMI, you’d do this: $62,900 x .50 = $31,450, whereas the USDA lists $31,950. These slight variations are likely due to USDA including non-wage sources of income in the household, such as child support, SSI, or alimony. The income numbers represent the maximum allowable to qualify for each category. Therefore, a Lake County household of 2 with an income of $31,900 would qualify for Very Low Income programs; however, if the income were $32,000, they’d be in the range for Low Income programs.
|Lake County||Number in the household|
|50% AMI (Very Low Income)||$ 31,950||$ 42,200|
|80% AMI (Low Income)||$ 51,100||$ 67,450|
|Sumter County||Number in the household|
|50% AMI (Very Low)||$ 33,400||$ 44,100|
|80% AMI (Low)||$ 53,450||$ 70,550|
Many myths abound regarding what ‘affordable’ means for housing and who qualifies for such programs. It’s no exaggeration to say that every legitimate program that strives to help people keep their housing cost affordable (paying no more than 30% of their income for housing) is using the same foundation: the AMI.
In our next installment, we’ll put a few sample budgets to the test. We’ll take various monthly incomes at different hourly wage rates, and we’ll allocate the money to expenses using generally-accepted financial advisor recommendations. In doing so, we’ll see what percent of the typical income goes to housing versus the recommended 30% figure. And we’ll be able to answer the question: at what income is housing affordable for Lake and Sumter Counties?
Your turn: How does your income, or that of your employees, compare to the AMI for Lake or Sumter counties? How do you think this affects the amount of money left, after housing is paid, to cover all other living expenses? –> Respond to us on facebook with your thoughts to continue the conversation
Article By: Lee Owen, Habitat Volunteer
The holidays are times when traditions are born, when gathering together holds more sentiment and when houses become homes. Whether your welcoming in generations of family and friends, or your traveling hundreds of miles to spend time with your loved ones, the phrase “Home for the Holidays” stirs emotions in all of us. However, for those dealing with the chaos caused by a sudden change in their living situation, the holidays are often accompanied by constant reminders that their sense of home has been washed away.
Surviving the utter destruction that swept through Puerto Rico with Hurricane Maria was just the beginning of an arduous journey that led Yolanda and Osvaldo to Central Florida and ultimately to Habitat for Humanity. “The experience was horribly devastating,” says Yolanda. “We lost our electricity, we lost food and there was no water. A lot of lives were lost on the island.” In fact, nearly 3,000 deaths we’re caused by the hurricane.
With the help of a church located in the states, the couple fled their home in Puerto Rico, destined for Sanford, Florida, with only the belongings they could carry in two suitcases. After spending their first month in a hotel in Sanford, they were able to find an apartment in Casselberry. However, after their first year in the apartment, the rent was set to increase to a point that would challenge their means.
“I started searching in August for other options, rental opportunities, but none suited our economic abilities,” said Yolanda. “I turned on the news and an interview that mentioned a community being developed by Habitat for Humanity caught my attention.”
The community was Habitat for Humanity’s Veteran’s Village in Umatilla, Florida. Veteran’s Village is a collaborative project that provides access to affordable quality housing and holistic wraparound services through a partnership with Combat Veterans to Careers.
“There’s our House!” Yolanda remembers saying to her husband. What she didn’t remember was hearing any contact information. A week went by and, while in prayer and searching the internet, Yolanda found the information she was looking for and, after confirming her husband Osvaldo was a Veteran of the Vietnam war, they began the process.
The couple celebrated their first Christmas in their new home with their children who traveled to spend the holidays with them. “Our new home was full of joy, many emotions and gratitude,” said Yolanda. They also brought with them the tradition of “Three Kings Day,” a Latin-American celebration akin to the “Feast of the Epiphany,” along with songs from the island and traditional holiday cuisine.
“In Puerto Rico, everything is decorated with lights during the Christmas season and that’s exactly what we did here,” said Yolanda. “We decorated the outside of our house as well as the inside with our Christmas Tree.”
The couple says the warmth of their new community has contributed to them feeling at home. They’ve developed “marvelous friendships,” sharing meals and great conversations with their new neighbors.
Having a “home” again was more than just finding an affordable place to live for Yolanda as Osvaldo. “In this stage of our lives, my husband and I are enjoying the peace and tranquility which God has gifted us through our new house,” she said. “And a house becomes a home by the love that is shared in it.”
Are you dreading the day the holiday decorations come down? Sorting, stacking and stuffing everything back into storage. A perennial puzzle requiring the virtue of patience needed to ensure everything fits back into a finite amount of space. Perhaps now’s the time to destress by decluttering; letting go of those things that no longer have a place in your space.
Here are a few tips to help you identify the items you can remove without remorse:
Time is not on its side.
Start by evaluating items that make less of an appearance than those annual adornments your packing away. We’re not saying you should toss out precious family heirlooms, but if it’s an everyday object, not worthy of every-year consideration, then it’s likely something you can let go.
Your D.I.Y. is D.O.N.E.
If your Pinterest projects have taken a back seat to more interesting pursuits, it’s probably time pass along the tools of the trade.
Soccer Mom (or Dad) no more.
Suburban garages overflow with memories of glory days. If your tiny tots have outgrown their love of lacrosse, then pick up sticks and pass them along to the next generation. If you’ve outsourced your outdoor maintenance, then the same rule applies to your lawn equipment.
One (or more) of these things does not belong.
So, you have a few great pieces of furniture or art that just don’t fit your new décor or sense of style. Upgrade your look with a “less-is-more” feel and ditch the distractions.
Everything in its place.
Put everything away in your house, then evaluate those things that have no place in your home or your life. If they don’t make either better, it may not be worth finding somewhere to stash them.
You’ll undoubtedly come across a number of things you can do without. You’ll probably even find a few items that you’ll actually be better off without. Before you dump them on the curb, consider donating items that are in good condition to one of our four local Re-Store locations. Your decluttering donations will help make countless lives better, including your own.