Appendix B: Glossary

Family—The "families" eligible for HUD programs have traditionally included households with relatives, households with children, elderly single persons age 62 or older, and single persons with disabilities. The Cranston-Gonzalez National Affordable Housing Act of 1990 broadened the statutory definition of "family" in a way that makes all households eligible for rental programs. In this report, however, the term "family" refers only to non-elderly "family households" in which one or more persons in the household are related to the householder by birth, marriage, or adoption.

Families with children—Households with a child under age 18 present.

Elderly—Household in which the head of household or spouse is age 62 or older and there are no children present.

Other families—Households with a non-elderly householder and no children in which at least one person is related to the householder by birth, marriage, or adoption.

Nonfamily households—Households with a single non-elderly person living alone or only with nonrelatives.

Households having members with disabilities—Ideally, this category should include all non-elderly households with adults who have disabilities. However, none of the available data sources count these households perfectly. The American Housing Survey (AHS) proxy used in this and previous reports is known to be an underestimate because it counts only single persons living alone or with nonrelatives who report receiving Supplemental Security Income (SSI) income. HUD program data show appreciably more households (without children) having members with disabilities receiving rental assistance than does the AHS proxy. SSI data on SSI recipients who are blind or have other disabilities permit more complete counts of very-low-income renters receiving HUD assistance or having a severe rent burden. Even these data exclude very-low-income persons who have disabilities with incomes above SSI levels.

Types of Income

Income—Income in the AHS is based on the respondent's reply to questions about income during the 12 months prior to interview. It includes amounts reported for wage and salary income, net self-employment income, Social Security or railroad retirement income, public assistance or welfare payments, and all other money income, prior to deductions for taxes or any other purpose. Comparison to independent sources of data on household income suggest that AHS respondents underreport income by some 15 percent on average. In 1993, however, the AHS began asking more detailed questions on nonwage income, and the share of households reporting nonwage income rose from 63 percent (in 1991) to 77 percent. Following HUD rules for income eligibility, the first three worst case reports also included imputed income from equity in an owned home as income for owners, but income from equity is not included in this report.

Family income—Reported income from all sources for the householder (the first household member 18 years or older who is the owner or renter of the housing unit) and other household members related to the householder.

Household income—Reported income from all sources for all household members.

Housing Problems

Overcrowding—The condition of having more than one person per room in a residence.

Rent or cost burden—Ratio between payments for housing (including utilities) and reported household income. The calculation used in this report is based on gross income reported for the previous 12 months. It does not make the adjustments to income required by housing assistance programs before percentage-of-income rents are determined. To the extent that respondents underreport total income, the AHS estimates overcount the number of households with cost burden.

Moderate rent or cost burden—Housing costs between 31 and 50 percent of reported income.

Severe rent or cost burden—Housing costs exceeding 50 percent of reported income.

Inadequate housing—Housing with severe or moderate physical problems, as defined in the AHS since 1984. These definitions are presented in Appendix A of the AHS published volumes in detail and in Appendix D of this report. Briefly, a unit is defined as having severe physical problems if it has severe problems in any of five areas: plumbing, heating, electrical system, upkeep, and hallways. It has moderate problems if it has problems in plumbing, heating, upkeep, hallways, or kitchen, but no severe problems. As Appendix C of this report details, some of the questions underlying definitions of inadequate housing were changed in the 1997 questionnaire.

Priority housing problems—Problems qualifying for Federal preference in admission to assisted housing programs between 1988 and 1996: paying more than one-half of income for rent (severe rent burden), living in severely substandard housing (including being homeless or in a homeless shelter), or being involuntarily displaced. Because the AHS sample tracks housing units and thus cannot count the homeless, AHS estimates of priority problems in this report include only households in housing units with cost burdens above 50 percent of income or housing with severe physical problems.

Income Categories

HUD-adjusted area median family income (HAMFI)—In 1974, Congress defined "low income" and "very low income" for HUD rental programs as incomes not exceeding 80 and 50 percent, respectively, of the area median family income, as adjusted by HUD. Statutory adjustments now include upper and lower caps for areas with low or high ratios of housing costs to income and, for each nonmetropolitan county, a lower cap equal to its State's nonmetropolitan average. Estimates of the median family income and the official income cutoffs for each metropolitan area and nonmetropolitan county are based on the most recent decennial census results and then updated each year by HUD. Each base income cutoff is assumed to apply to a household of four, and official cutoffs are further adjusted by household size: one person, 70 percent of base; two persons, 80 percent; three persons, 90 percent; five persons, 108 percent; six persons, 116 percent; and so on.

Low income—Reported income not in excess of 80 percent of HAMFI or, if lower, the national median family income. According to the AHS, in 1997, 42 percent of U.S. households reported incomes that fell below the low-income cutoffs.

Very low income—Income not in excess of 50 percent of HAMFI. In 1997, 27 percent of U.S. households reported income below the very-low-income cutoffs.

Extremely low income—Income not in excess of 30 percent of HAMFI. In 1997, 16 percent of U.S. households reported income below 30 percent of HAMFI.

Poor—Household income below the official national poverty cutoffs for the United States for that household size. The poverty cutoff for a family of four approximates 33 percent of HAMFI. Forty-four percent of very-low-income households and 85 percent of extremely-low-income households are poor.

Middle income—For this report, income between 81 and 120 percent of HAMFI. About one-fifth of U.S. households (19 percent) reported income in this category in 1997.

Upper income—For this report, income above 120 percent of HAMFI. Almost two-fifths of U.S. households (39 percent) reported income in this category in 1997.

Rental Affordability Categories

Several Federal rental programs define "affordable" rents as those requiring not more than 30 percent of an income cutoff defined in relation to HAMFI. As discussed in Exhibit 4, for example, under the Low-Income Housing Tax Credit (LIHTC), housing units with rents up to (30 percent of) 60 percent of HAMFI qualify as affordable and eligible for the credit. This report generalizes the approach developed to define LIHTC maximum rents for units of different size to categorize units as affordable to incomes at or below 30 percent of HAMFI, between 31 and 50 percent of HAMFI, and above 50 percent of HAMFI. Gross rents for each unit, including payments for utilities, are compared to (30 percent of) HUD's 30 percent and 50 percent of HAMFI income limits. The income limits are adjusted for number of bedrooms using the formula codified at U.S.C. 42(g)(2)( C ): no bedrooms, 70 percent of base; one bedroom, 75 percent; two bedrooms, 90 percent; three bedrooms, 104 percent; four bedrooms, 116 percent. This formula assumes that an efficiency houses 1 person, a one-bedroom unit houses 1.5 persons, and each additional bedroom houses another 1.5 persons. For vacant units, the costs of any utility that would be paid by an occupant were allocated using a hot deck technique with a matrix of structure type, AHS climate code, and eight categories of gross rent.

Housing Assistance Status

Receiving assistance—As discussed in Appendix C of this report, the AHS questions on receiving assistance were changed in both content and order in 1997. Formerly, the worst case reports characterized as "assisted" those households responding "yes" to the following AHS questions: "Is the building owned by a public housing authority? Does the Federal Government pay some of the cost of the unit? Do the people living here have to report the household's income to someone every year so they can set the rent?"

In this report, however, the 1997 estimate of assisted households includes those responding affirmatively to one or more of the questions "As part of your rental agreement, do you need to answer questions about your income whenever your lease is up for renewal? (If so,) to whom do you report your income? Do you pay a lower rent because the government is paying part of the cost of the unit? Is the building owned by a public housing authority?" Because State and local assistance are not separately identified by these questions, the reestimates of assisted households done in this report for 1991, 1993, and 1995 added those households responding that "a State or local government pay[s] some of the cost of the unit" to the estimates made earlier from the questions listed above.

Worst case or with acute needs—Unassisted very-low-income renters with the priority housing problems that formerly gave them preference for admission to rental assistance programs. In this report, for the first time, unassisted renters exclude those reporting State or local assistance.

Location

(Standard) Metropolitan Statistical Area—From 1973 to 1983, the definitions of metropolitan location in Annual Housing Survey data corresponded to the 243 Standard Metropolitan Statistical Areas (SMSAs) used in the 1970 census. Since 1984, metropolitan location in the AHS has referred to the MSAs defined in 1983, based on the 1980 census.

Region—The four census regions are the Northeast, Midwest, South, and West.