Understanding Housing Affordability, Affordable Housing, Attainable Housing, and Market-Rate Housing

Housing is one of the most frequently discussed topics in Grand Junction, but terms like housing affordability, affordable housing, attainable housing, and market-rate housing are often used interchangeably—even though they mean very different things. Understanding these differences helps explain why communities invest in a variety of housing types and why no single solution addresses every household's needs.

Housing Affordability: Something Everyone Needs

Housing affordability is a financial concept—not a type of housing.

In general, housing is considered affordable when a household spends no more than 30% of its gross monthly income on housing costs, including rent or mortgage payments, insurance, taxes, utilities, and other required housing expenses.

This 30% guideline is used by the U.S. Department of Housing and Urban Development (HUD) because it allows households to have enough income remaining to pay for other necessities such as:

• Food

• Transportation

• Childcare

• Healthcare

• Savings and emergencies

When households spend more than 30% of their income on housing, they are considered cost-burdened. Households spending more than 50% of their income on housing are considered severely cost-burdened, placing them at greater risk of financial hardship and housing instability.

Housing affordability is important for every household, regardless of income.

Affordable Housing

While everyone needs affordable housing costs, Affordable Housing (capitalized) refers to a specific type of housing with legally defined requirements.

Affordable housing is designed for lower-income households and almost always includes public investment because the housing cannot generally be built or operated using market rents or home prices alone.

Affordable housing typically includes four key characteristics:

1. Income Restrictions

Residents must meet established income limits to qualify.

These limits are typically based on Area Median Income (AMI) and are verified before occupancy.

2. Maximum Rent or Home Price

Affordable housing has maximum rents or sales prices established by HUD, the State of Colorado, or another funding agency.

Unlike market-rate housing, these rents and prices do not simply increase because the real estate market increases.

While annual adjustments may occur based on program rules or updated AMI calculations, the rent or sales price remains regulated to preserve affordability and cannot increase at normal market rates.

3. Long-Term Affordability

Affordable housing includes a legally binding affordability requirement such as:

• Deed Restrictions

• Covenants

• Land Use Restriction Agreements (LURAs)

• Other recorded affordability agreements

These legal mechanisms generally keep housing affordable for 30 years or longer, and in many cases permanently.

4. Public Subsidy

Because affordable housing has income limits, regulated rents or home prices, and long-term affordability requirements, the revenue generated by the project is often insufficient to cover the full cost of construction and financing.

For that reason, affordable housing almost always relies on one or more funding sources such as:

• Low Income Housing Tax Credits (LIHTC)

• State or federal grants

• Local government assistance

• Housing trust funds

• Tax-exempt bonds

• Housing Choice Vouchers

• Other public or nonprofit financing

Without these funding sources, many affordable housing developments would not be financially feasible.

Attainable (Workforce) Housing

Attainable housing serves households that earn too much to qualify for many affordable housing programs but still cannot reasonably afford today's housing market.

Many attainable housing residents are the people who keep our community functioning, including:

• Teachers

• Police officers

• Firefighters

• Healthcare workers

• Construction workers

• Hospitality employees

• Administrative staff

• Service industry workers

• Young professionals

• First-time homebuyers

Unlike affordable housing, attainable housing may or may not include public subsidies.

Some attainable housing developments are built without government assistance. However, as the gap between development costs and market affordability continues to grow, many attainable housing developments now receive limited public support through incentives such as:

• Impact fee reductions

• Infrastructure assistance

• Public land partnerships

• Low-interest financing

• Limited grants

Depending on the funding source, some attainable housing developments also include income restrictions, while others simply target moderate-income households through pricing.

Market-Rate Housing

Market-rate housing is housing whose price is determined entirely by supply and demand.

Unlike affordable or attainable housing, market-rate housing generally:

• Has no income restrictions

• Has no maximum rent or sales price

• Has no long-term affordability requirements

• Typically receives no public affordability subsidy

Because prices respond directly to the real estate market, rents and home prices increase (or decrease) as market conditions change.

Market-rate housing plays an important role in meeting overall housing demand, but it is not specifically designed to serve households with affordability challenges.

Current Market Conditions in Grand Junction

Current market data illustrates where market-rate housing generally falls today:

Rental Housing

• Existing and newer market-rate apartments typically serve households earning approximately 75%–120% AMI.

• Newly constructed apartment communities generally target households around 95% AMI.

Homeownership

• Average existing home values generally require incomes around 130% AMI.

• Typical new construction homes generally require incomes between 145% and 150% AMI, with many new homes falling within a broader market range of 140%–220% AMI.

What is Area Median Income (AMI)?

Area Median Income (AMI) is the midpoint of household incomes for a region and is calculated annually by the U.S. Department of Housing and Urban Development (HUD).

AMI is adjusted based on household size and serves as the standard used by most housing programs to determine eligibility and affordability.

Housing programs frequently reference percentages of AMI because they provide a consistent way to compare housing affordability across different income levels.

Grand Junction's Housing Definitions

In August 2023, the Grand Junction City Council adopted Resolution 65-23, establishing the City's definitions for Affordable and Attainable Housing.

Affordable Housing

Affordable Housing includes units with a contractual affordability requirement lasting 30 years or more.

Rental Housing

• Affordable to households earning 60% AMI or below

Homeownership

• Affordable to households earning 100% AMI or below

Attainable (Workforce) Housing

Rental Housing

• Affordable to households earning approximately 80% to 100% AMI

Homeownership

• Affordable to households earning approximately 100% to 140% AMI

Why Does This Matter?

One of the biggest challenges facing Grand Junction is the growing gap between what households earn and what housing costs.

Using current 2026 data:

This means the average Grand Junction household earns significantly less than the income generally needed to purchase today's average home or a newly built home.

Closing that gap requires a balanced housing strategy that includes:

• Preserving existing affordable housing

• Building new affordable housing

• Expanding attainable/workforce housing

• Supporting market-rate housing production

• Encouraging housing choices across all income levels

Together, these efforts help ensure Grand Junction remains a community where residents of all incomes can live, work, and thrive.