“Big A” affordable housing: What is regulated affordable housing, and what do institutional investors need to know?
Interest in affordable housing has continued to increase over the past several years, especially among institutional investors. Capital is increasingly flowing to the sector, and at a rapid rate, making the term “affordable” somewhat of a buzzword.
But what does “affordable housing” actually mean, and how does it differ from other multifamily assets, including workforce, attainable and essential housing? The fact is, important and significant distinctions exist among these different segments, yet they are often referred to under the same umbrella of “affordable.”
Rents are regulated based on AMI
One of the biggest differences between “big A” affordable housing and other multifamily segments is rent regulation. This means rents are tied to the area median income (AMI) of a local region, and affordable properties are generally reserved for households with incomes less than 60 percent of AMI. Although workforce housing is generally