Regional Housing Plan
Housing 101 Glossary

An Accessory Dwelling Unit (ADU) is a secondary residential unit located on the same lot as a primary dwelling. It provides additional housing and can be a converted garage, basement apartment, or separate building, potentially adding affordable housing options in established residential areas.

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Area Median Income (AMI) is the midpoint of a region's income distribution, meaning half the households earn more and half earn less. It is established for each community by HUD and used to determine eligibility for affordable housing programs and to set income limits for housing assistance in a specific geographic area. "Low-income" housing is typically affordable to households earning below 80% AMI. "Middle-income" refers to 80-120% AMI.

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A primary focus of this - and any - housing plan is the degree to which the community has adequate access to “attainable housing” options. In other words, can local residents attain housing within their community that meets their needs at price points they can reasonably afford given their incomes? In this way, “attainable housing” and “affordable housing” are synonymous.

The following concepts are involved in this determination:

• Household income combines wages and other earnings across all members of the household, including income from employment as well as pensions, social security, disability benefits, etc. Income can also be interest and earnings from wealth that is reinvested.
• Affordable is defined as housing which costs no more than 30% of a household’s income.
• Housing costs include primary expenses such as rent and mortgage payments as well as other fundamental expenses including property tax, insurance, and utilities.

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A Community Land Trust (CLT) is a nonprofit organization that acquires and manages land to provide long-term affordable housing. It separates land ownership from building ownership, ensuring housing remains affordable for future generations by controlling resale prices and prioritizing community stewardship and stability. Properties are typically leased to income-eligible households earning below 120% or 80% AMI.

Pictured at left is a South Bend house developed on land trust property by the Northeast Neighborhood Revitalization Organization (NNRO) which sold for 20% of its appraised value to an approved low-income buyer. Source

Disambiguation: Though similar to a land bank in its general mission, a key distinction of CLTs is they hold and lease their property to ensure long-term affordability rather than selling the property right after redevelopment.

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Cost burden occurs when a household spends more than 30% of its income on housing-related expenses, including rent or mortgage, utilities, and maintenance. This situation often leads to financial strain, making it difficult to afford other necessities such as food, healthcare, and transportation.

"Moderate cost burden" refers to a household spending 30-50% of its income on housing. "Severe cost burden" refers to a household spending more than 50% of its income on housing.

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Translating sale price to monthly cost. Even setting aside factors such as interest rates and down payments, changes in home sales prices - especially dramatic increases - can significantly limit households' ability to access the housing options they may need or prefer. First-time homebuyers are especially impacted by rising prices because they lack access to equity in the form of a prior home that they might otherwise be able to sell into the same market and derive extra value from.

Here is how example sale prices translate into typical monthly costs based on current mortgage rates, down payments, property taxes, utility costs, and related factors in Elkhart County:

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Often referred to as the "national housing crisis," a shortage of units across the country - especially those at prices moderate to low income households can afford - has led to mounting socioeconomic challenges in most communities across the country, including increased homelessness, cost burden, and delayed first time home buying. The housing shortage is the result of a combination of factors, from chronic under production of housing for many years to rapidly escalating construction prices and interest rates.

As this report reveals, the Michiana region is experiencing its version of the housing shortage in many ways, from under supply of units affordable to low income to a lack of housing options for downsizing seniors.

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Factory-built housing is built in modular segments and transported to the home site for quick assembly on a finished foundation, typically a concrete slab. Each segment arrives nearly finished, with structure, cladding, electrical, plumbing, windows, and other components already installed. The assembly process can take as little as one day, not including site work such as grading, infrastructure, and foundation preparation.

When constructed and assembled to high quality standards, factory-built housing can provide cost savings for homeowners and renters through more efficient fabrication, shorter development timeframes, and better energy performance.

Modular, factory-built housing can include both single-family and multifamily units.

Disambiguation: This form of factory-built housing should not be confused with mobile homes or other forms of manufactured housing that rest on frames or chassis rather than finished foundations and may be leased or owned indepdent of the land (such as a "trailer park" or "mobile home" lot fee model).

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Housing trust funds can be financed through a variety of sources, including local taxes, developer fees, municipal surpluses, grants, and donations. The funds support affordable housing construction, renovation, and related services.

In Indiana, certain affordable housing trust fund structures include affordability limitations, such as dedicating half the funding to units serving <50% AMI households and remaining funds serving <80% AMI households.

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Infill housing consists of new housing added to established neighborhoods, either built on underutilized parcels or added to already-improved parcels. Infill developent can take many forms, from small ADUs and carriage houses to townhomes to small multifamily buildings. Often, infill housing requires context-sensitive architecture and urban design to help new structures fit in with their existing neighborhood settings.

The image at left is from South Bend's pre-approved infill housing guidelines.

Disambiguation: Missing middle housing and infill housing are sometimes conflated. "Infill" refers to the housing structure type physical context in which it is built. "Missing middle" refers to housing price points affordable to middle-income households. In some cases, infill housing also serves as missing middle but this is not always the case.

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A land bank is an entity that acquires, manages, and repurposes vacant, abandoned, and tax-delinquent properties to foster neighborhood revitalization, reduce blight, and support economic development and affordable housing initiatives. Land banks may be administered at the municipal level or regionally through collaboration between multiple jurisdictions under a designated managing organization and fiscal sponsor. Land banks are often paired with housing trust funds which help finance construction and other redevelopment activities. Properties are typically sold to income-eligible households earning below 80% AMI.

The image at left shows the demolition of an abandoned property in preparation for redevelopment by the Evansville Land Bank Corp, a land bank formed through interjurisdictional agreement between Vanderburgh County and the City of Evansville.

Disambiguation: Though similar to a Community Land Trust in its general mission, one key distinction is that land banks sell the property they redevelop rather than holding and leasing long-term.

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Too expensive to qualify for most subsidies but not expensive enough to justify market-rate development, middle-cost housing sometimes falls through the cracks and is under-produced. As a result, people earning around the median income often have few options that meet their budget and housing preferences, forcing them to either pay beyond their means or compete for lower-cost units intended for low-income households.

Disambiguation: Infill and missing middle housing are sometimes conflated. "Infill" refers to the housing structure type physical context in which it is built. "Missing middle" refers to housing price points affordable to middle-income households. In some cases, infill housing also serves as missing middle but this is not always the case.

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While out-of-state investors have long played a role in local real estate markets, recently some of these entities have begun assembling large portfolios, particularly single family houses that are operated as rental units. In some cases, out-of-state investors may purchase enough units within a single neighborhood to influence housing affordability and driving up local prices, especially among rentals. This trend also tends to transition houses from owner-occupied to renter-occupied, reducing homeownership rates in neighborhoods where investor-owned units are highly concentrated.

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The rental housing market is sometimes misunderstood as limited to transient people uninterested in investing in the community, or households who cannot afford to buy. In reality, rental housing serves people and households of all types and at all stages of life.

Rental housing types range from single family homes to attached and small multifamily units to accessory dwelling units to larger multifamily developments.

Most new rental development is priced near the top of the market to cover today's elevated construction costs, though units can be made more affordable through policies and incentives that help mitigate development costs and/or assist tenants with rental expenses.

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A short-term rental is a furnished living space rented out for brief periods, typically less than 30 days. Commonly found on platforms like Airbnb and VRBO, these rentals provide temporary lodging for travelers, vacationers, or business visitors, offering an alternative to traditional hotels and long-term leases. However, in some communities, these rental properties can effectively remove units from the local housing inventory, creating competition between rental property investors and households looking for long-term housing.

The map at right indicates current short term rentals across the South Bend and Elkhart area. (Image: AirDNA)

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Subsidized housing is government-supported housing where low-income tenants pay reduced rent. The difference between tenant payments and market rent is covered by government subsidies. This housing aims to provide affordable living options for individuals and families who cannot afford market-rate housing.

Subsidies may be provided at all levels of government from federal to state to local and can take many forms, from grants to tax credits to incentives and fee waivers.

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Tax Increment Financing (TIF) dedicates the net-new tax revenue generated by a real estate development toward funding public infrastruture investments that may have been necessary to make the project possible in the first place. Taxes assessed against the original value of the property typically continue to pass through to the municipal coffers but taxes assessed against the additional value derived from the vertical development and other improvements is captured by the TIF for a period of time (often 25 years) before this increment also feeds back to the municipality's general fund.

The diagram at left comes from this overview from the Indiana Office of Community and Rural Affairs explaining how TIF works in Indiana.

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