Donahue Peebles III: The Overlooked Struggles of Middle-Income Urban Dwellers
Written by Donahue Peebles III
Housing affordability, or rather, the lack of it, has become a critical concern across high-density urban areas in the United States. While these issues have been long-standing, they have only grown more acute over the past years. Recent data reveals that between December 2017 and September 2022, the median rent for newly leased units rose by a staggering 32 percent, primarily during 2021 and 2022. This steep increase has posed significant challenges for families across income segments, but the middle-income earners, those making between 60% and 100% of Area Median Income (AMI), are uniquely disadvantaged.
The Policy Gap: Middle-Income Earners in the Housing Affordability Crisis
Current housing policies and affordable housing programs primarily target the lower-income brackets. For instance, the Low-Income Housing Tax Credit (LIHTC), Housing Choice Vouchers, and gap financing mechanisms like HOME and Housing Trust Funds focus on families at or below 60% of the AMI. As these initiatives strive to address the housing needs of the most vulnerable populations, an unintended consequence emerges: middle-income earners, who often find themselves squeezed between not qualifying for subsidies and being unable to comfortably afford market-rate housing, are left out in the cold.
By 2019, an alarming 9.4 million households without rental assistance were already spending over 50% of their income on rent or were living in severely inadequate housing. Among these renters, 7.8 million were considered very low income as defined by HUD, leaving nearly 2 million households unaccounted for, this indicates that the housing crisis is not confined to this group. Middle-income households in urban areas, who neither qualify for subsidies nor comfortably afford surging rents, are increasingly burdened.
Zoning Reforms: A Key to Expanding Housing Supply
To alleviate the mounting pressure on middle-income earners, a comprehensive policy intervention is needed. A promising starting point lies in zoning reforms. Current restrictive zoning regulations artificially limit housing supply, inflating housing costs. By facilitating the development of high-density, multi-family housing units in high-demand areas, these reforms could help bolster supply, potentially moderating rent prices.
Middle-Income Housing Tax Credit: Bridging the Housing Affordability Gap
A middle-income housing tax credit could be another critical instrument in resolving the middle-income housing dilemma. Modeled after the successful LIHTC, this new initiative could subsidize the creation or refurbishment of housing units designated for middle-income households, those earning between 80% and 140% of AMI. This would expand the housing stock available to this demographic and could smooth their transition towards market-rate housing.
Implementing Middle-Income Housing Vouchers
Building on the voucher concept, a new middle-income housing voucher program could further ease the burden on these families. By subsidizing up to 20% of rent for market-rate units in high-cost Metropolitan Statistical Areas (MSAs), this program could make housing more affordable for middle-income households without distorting the broader housing market.
Towards an Equitable and Balanced Housing Policy
The housing affordability crisis requires an inclusive, balanced response that recognizes the struggles of middle-income earners alongside those of low-income families. The integration of zoning reforms, a middle-income housing tax credit, and a middle-income voucher system can promote a balanced housing market that caters to the diverse needs of all income groups. Such a comprehensive approach to housing affordability can contribute to vibrant, equitable, and economically resilient urban communities.
In conclusion, while the importance of maintaining and enhancing initiatives for low-income families is unquestionable, there is a compelling case for an augmented focus on middle-income earners. With the appropriate policy adjustments, we can ensure a balanced, comprehensive response to the housing affordability crisis that leaves
Donahue Peebles III
Donahue Peebles III, Founder and Chairman of Legacy Real Estate Development, is a Washington, D.C. native and Columbia University graduate, earning his Bachelor’s of Economics in 2016. Upon completing his degree, Donahue immediately began cultivating his personal legacy working side-by-side with his father, Don Peebles, to propagate the continued success of the family’s namesake real estate development firm.
