The term "Workforce Housing" and "Affordable Housing" are two vast terms with a wide range of meanings. It is easy to get these terms mixed up if you're not in real estate. In this article, Maxwell Drever  will clarify how commercial real estate professionals use these terms.

Hopefully, when you have finished reading this, you will understand both these terms and how they are used.

Affordable Housing

Affordable housing is suitable housing for a wide variety of extremely low to moderate-income households. The low prices of these homes allow renters to cover other basic living expenses such as food, clothing, transportation, medical care, and education. Affordable housing is generally affordable if it costs less than 30% of a household's gross income.

In the case of affordable rental property, this may or may not be owned by private developers or investors, local governments, charitable organizations, or community housing providers. Non-profit communal housing providers usually manage it, but private firms can also handle it.

As you can see, the concept of affordable housing is inherently different from workforce housing. Workforce housing is meant to accommodate families earning less than 60% of the median income.

An investor should already know that the number of affordable developments is shrinking. Nevertheless, local governments have found creative methods enabling lower-income people to live and work in safe neighborhoods with their families at a fair cost.

Workforce Housing

Workforce housing is to provide low-cost, safe, and quality homes to lower working-class people. It's a reasonable option for homeowners or renters who wish to live close to their place of work and avoid wasting time traveling on public transport.

As per Maxwell Drever, one definition of workforce housing is that it is a form of affordable housing for households earning 60 to 120% of the area’s median income. Others have defined affordable housing as costing between 25 and 45% of one's actual earnings. Workforce housing is a type of housing for public employees who are vital parts of the community but cannot afford to live there, such as professors, local police, fire crews, and others.

Workforce housing also includes apartments for working professionals, construction workers, and retail salespeople who are having difficulty finding work nearby and need a place to live.

Compared to genuinely low-cost housing, workforce housing makes up a far more considerable portion of the market. It applies to almost all low-cost housing that is cheaper than equivalent housing in other markets. This type of low-cost accommodation fills the gap between government-supported living and private-sector assisted living for people who earn just enough to avoid government aid but can't afford to rent or buy the new homes cropping up all over the place.

Conclusion

According to Maxwell Drever, both affordable housing and workforce housing are different from each other. Knowing which type of housing you want to opt for is important so as to make a decision that serves you in the long term.