How Affordable Housing and Market-Rate Housing Differ

For over two decades, Gino Canori has been working at Related California, a multi-family real estate development company headquartered in San Francisco, California. The executive vice president of the company, Gino Canori oversees its $3 billion pipeline of commercial projects, including both market-rate and affordable housing units.

There are many misconceptions about affordable and market-rate housing. For some, affordable housing is associated with outdated areas and cheaper building materials, but this isn’t necessarily the case. “Affordable” primarily means that a person who rents the unit spends less than 30 percent of their monthly income on rent. Maintaining this takes on many forms, including setting income restrictions on certain units or supplementing resident rents with income from the government.

Market-rate housing has slightly different constraints. While there is still an income requirement that potential tenants must meet, the monthly rent is determined by many factors. Supply and demand is one such factor. In areas that are extremely popular and rented largely by individuals who prefer longer rentals, the market rate price is often higher than most affordable housing options.

However, this doesn’t mean landlords can charge any amount they like for market-rate housing. Rather, they must stay consistent for their area based on supply and demand. If rent prices are lower for other apartment units in the area, landlords charge a comparable rental price to stay competitive in that market.