The area median income for a family of four living in the San Antonio-New Braunfels region increased by about 6% from $83,500 to $88,600 this year, a change that makes more people eligible for housing assistance, but also could increase rents.

The U.S. Department of Housing and Urban Development recently released the 2023 area median incomes (AMI) and associated income limits that determine whether a household in a certain region is eligible for housing assistance programs.

The metric plays an important role in policymaking and development. HUD uses AMI to set rents for those living in federally subsidized housing, while local officials use AMI to direct funding toward specific housing goals. Developers use it to build housing that qualifies for public funding.

HUD determines an area’s AMI using Census data and inflation estimates, calculating the range of incomes in a region. The midpoint, or median, of those incomes is the AMI.

Typically HUD releases AMI in April, but data from the 2020 Census was delayed by the coronavirus pandemic, the agency stated. Opportunity Home San Antonio, the city's HUD-authorized agency, adopted the new AMI in May, and the new AMI will be effective for most federal housing programs and projects, like those funded through Community Development Block Grants, on June 15.

For low-income residents who struggle to afford rent, the higher AMI is a double-edged sword. The higher income limit means more people will qualify for rent and home repair assistance, but landlords who rent to tenants through most federal housing programs could legally raise rents if the tenants' lease agreements using the previous AMI have expired.

"It does kind of widen that net" of eligibility, said Brandee Perez, Opportunity Home's chief operating officer. If someone was told last year they didn't qualify for assistance because they "make too much money," those people who were on the cusp might successfully receive housing or other assistance this year.

"[The AMI increase is] giving folks hope, that they qualify," Perez said.

For the San Antonio-New Braunfels region, HUD groups Bandera, Bexar, Comal, Guadalupe and Wilson counties together. That skews the area’s AMI a bit higher than what it would be within San Antonio, which is one of the most impoverished major cities in the country. About 17.6% of the population — nearly 260,000 people in San Antonio — live in poverty, according to the U.S. Census Bureau's estimates.

The San Antonio-New Braunfels AMI has increased every year since 2016. In 2019, it jumped 6.3%, the biggest jump before last year’s 13% rise. Since 2012, the AMI has increased by nearly 46%.

The spike last year was likely due to HUD attempting to account for inflation and supply chain issues related to the pandemic, Perez said. "The federal government was trying to help offset what was happening across the country."

Once calculated, HUD then uses AMI to set the maximum rent that can be charged to residents who live in federally funded housing, including mixed-income properties developed through housing authorities and housing built using low-income housing tax credits or development grants.

HUD sets rental caps at no more than 30% of each AMI income level (for example, 80% of AMI, 60% of AMI, etc).

Under the new 2023 rent limits, HUD calculates the maximum rent for a family of four making 60% of AMI, or $52,680, can increase to about $1,320. Under 2022 limits, 60% of AMI was $50,100, and that family would have paid no more than about $1,250 on rent.

When HUD increases rent limits because of higher AMI, the agency is essentially saying that because people are making more money, they should be able to afford higher rents. But AMI does not necessarily correlate to a region’s true cost of living; it is simply the median of the region’s incomes.

At the same time, the increase is also a signal that HUD recognizes that more people, who are earning more money, still need housing assistance, Perez said.

AMI-based rent limits are a ceiling, not a floor; HUD does not require property managers to raise or charge rents to the maximum allowed under the calculation, Perez said. Not all properties will automatically increase rents to the maximum limit.

"They still base it off of the market that they're in. ... They may be able to get that full rent, but maybe not in all the areas [of San Antonio]," Perez explained.

Tenants who pay rent using housing choice (or “Section 8”) vouchers will not be affected, as their rent is restricted to 30% of their income, rather than being connected to AMI.

Neither will tenants of public housing projects, like those built by Opportunity Home, as those rents are also restricted to 30% of income. However, the agency's mixed-income properties, which offer both income-restricted units and market-rate units, could see rent increases related to the AMI increase.