While some markets are beginning to see a slight easing in home prices, housing affordability remains a persistent challenge across the nation. To tackle this issue, state and local governments have implemented various policies and programs aimed at easing the burden on potential middle-income renters.
A recent working paper titled “Subsidizing the Middle: Policies, Tradeoffs, and Costs of Addressing Middle-Income Affordability Challenges,” released by the Harvard University Joint Center for Housing Studies (JCHS), delves into these initiatives. The paper examines, compares, and contrasts different programs adopted by government officials, evaluating their potential impacts and benefits.
The study focuses on 11 state and local programs designed explicitly to address middle-income housing needs through direct subsidies (grants, loans, or public land donations) or indirect subsidies (such as property tax exemptions or government guarantees of construction loans).
Each program is unique in its activities, funding sources, and requirements, reflecting diverse geographical, political, and market conditions. For instance, Massachusetts offers loans of up to $100,000 per affordable unit, Michigan provides grants of up to $70,000 per unit for projects with at least 12 units and $80,000 for smaller projects, and Georgia's Rural Workforce Housing Initiative has allocated an estimated $24 million in infrastructure grants across three funding rounds, supporting the construction of just over 1,000 units at approximately $23,000 per unit.
Despite these differences, the programs share commonalities. Most determine eligibility based on a percentage of Area Median Income (AMI) rather than job status or career path, even those labeled as “workforce housing” programs. Additionally, while some programs fund rehabilitation, adaptive reuse, or acquisition and conversion, the emphasis is largely on new construction. For example, the Colorado Middle-Income Housing Authority aims to subsidize the creation of 3,500 units for middle-income renter households, including at least 2,800 newly built units.
The recent surge in middle-income housing programs corresponds with the rising unaffordability of housing for middle-income earners. As these policies proliferate, understanding their tradeoffs and target demographics becomes increasingly important.
The study suggests that states and cities seeking to increase housing supply and affordability for middle-income renters should consider more cost-effective methods than direct subsidies. Strategies such as liberalizing local zoning ordinances to allow a broader range of housing types (e.g., small multi-family buildings, ADUs, or manufactured homes), expedited permit processes, relief from certain environmental or community review requirements, reduced parking mandates, and density bonuses for projects that meet specific affordability criteria could all encourage development that benefits middle-income renters. These approaches can reduce overall costs per unit, creating affordability in housing markets without diverting financial resources from lower-income households.
By adopting these strategies, states and cities can create a more inclusive and affordable housing market that better serves the needs of middle-income renters.
Thank you to Savannah Housing & Laura Lane McKinnon
Housing Savannah, Inc
P.O. Box 23121
Savannah, GA 31403
(912) 651-6766
Laura Lane McKinnon
Executive Director | Housing Savannah, Inc.
D: (912) 651-6766
C: (912) 724-0575
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