A number of new housing initiatives recently have focused on easing the burden on middle-income renters, according to researcher Alexander Hermann of Harvard University. A representative sample of 11 areas in various pockets of the United States showed that a number of states and municipalities seek to give various types of aid to middle-income earners, as presented by Hermann’s analysis.
At the heart of the research was the question of whether aiding middle-income renters takes away from sorely needed aid to lower-income tax brackets. Since “lower-income renters outnumber middle-income renters,” Hermann said that, “middle-income housing (aid) should never come at the expense of lower-income housing.”
The study focused on wide-ranging areas of the U.S. and unpacked the numerous ways in which state and local governments attempted to help make housing more affordable for middle-income renters, in spite of the potentially controversial nature of prioritizing them over low-income initiatives. Many of the new initiatives were implemented in recent years, Hermann stated.
Hermann elaborated: “Middle-income renters are less likely to have children than lower-income renters. These are renters with cost burdens specifically. These households are also less likely to have a disability. Thirteen percent of middle-income renters versus 27% of lower-income renters (have a disabled household member).” These renters are also “twice as likely to have a bachelor’s degree” than their lower-income renting counterparts.
Different states used different methods of easing the burden on middle-income renters. For example, Florida’s Missing Middle Property Tax Exemption program aimed to eliminate property taxes for the people in its program, though that program focuses on multifamily only.
Other ways of easing the burden for middle-income renters were grants and loans for infrastructure development in Georgia, outright grants in Michigan’s Missing Middle Housing Program and in the small town of Breckenridge, Colorado, a multitude of options, including grants, utility hookups and fee waivers as part of their Workforce Housing Five Year Blueprint, the research showed.
“These programs exist in every region of the country,” Hermann said. “Not only that, but they encompass a range of market conditions, affordability challenges and political environments. This is suggestive to me that both the recency of these programs and their broad geographic diversity likely reflects the growing affordability challenges of middle-income households in much of the country since the start of the pandemic.”
The eligibility criteria by which these renters were chosen for the various programs examined in the study were determined by their comparison against Area Median Income (AMI). The data provided also showed that eligibility was broken out into several other classifications, such as geographical location and type of land chosen.
According to Hermann, “Many middle-income housing programs focus on production in rural areas or difficult to develop places. And this is where labor challenges make it difficult or harder to build housing. For example, in Georgia, the Rural Workforce Housing Initiative there funds infrastructure projects to enable middle-income housing development in rural counties only.”
A major hot-button topic in housing today is whether a larger federal effort would be appropriate to aid lower-income renters. Although Hermann offered several solutions on the state and local scale, a larger conversation is taking place in the political landscape regarding the affordability of housing, he pointed out. In keeping with this, Hermann also stated that lower-income renters should take precedence over middle-income renters in the larger scope of policy oriented decisions.
In spite of the debate over prioritization of funding allocation, the fact that something is being done about the issue of affordability is a positive sign. It’s also possible that there are missed opportunities that could be solved by casting a wider net instead of limiting the scope of the issue to state-wide and city-centered solutions, the report stated.
But for now, the issue remains constrained to a smaller scope. During a question-and-answer session, Hermann highlighted the fact that the feasibility of pouring resources into an issue as expensive as housing is often front and center for the bodies that govern such resource allocation. His favored solution would be to “liberaliz(e) local zoning ordinances and allow the construction of a range of housing types” because it “would be more cost effective.”
By proffering this solution—allowing local zoning ordinances more leeway and building a more diverse variation of housing units on the spectrum of possible builds—Hermann may have shown a way forward if the political landscape remains unchanged in this major area of Americans’ financial lives.
As with many things related to housing, the election may play a pivotal role. Vice President Kamala Harris has made the issue one of particular prominence in her platform. Former President Donald Trump, on the other hand, has vowed to deregulate the newly constructed housing market if elected, but has also more recently expressed openness to the kind of zoning reform Hermann referenced, telling Bloomberg News in July that zoning is “a killer” for housing costs.
But for now, the efforts are largely allocated to state and municipal levels. Hermann’s suggestions may not encompass a national effort, but they have the potential to have an impact in a number of different areas throughout the country.
He concluded his remarks in part by saying that more research and evaluation is needed.
“I think as these programs become more common, it’s important to look and think about what they’re doing and why,” he said. “This is a start I hope. I hope folks will continue to look at them more and think about how they compliment each other and evaluate them.”
To read the full report, visit: https://jchs.harvard.edu/sites/default/files/research/files/harvard_jchs_middle_income_housing_hermann_etal_2024_updated.pdf
