Cambridge, Mass., a hub for prestigious universities and biotechnology companies, is setting aside apartments to help an unexpected group of people find lower rents: families with incomes topping $100,000.
The city recently held a lottery for 15 units with below-market rents, in a new building a few subway stops from downtown Boston. A family of four with an income well into the six-figure range—a maximum of $118,200—could qualify for some of the apartments. The city received at least 45 applications.
Many places around the country are grappling with how to address the need for more housing that’s affordable for people like teachers, nurses, firefighters and waiters. Few federal subsidies are available. At the same time, skyrocketing construction costs have made developers focus on building luxury rentals, not middle-class housing.
At least half a dozen municipalities—including New York City, San Francisco, Jupiter, Fla., and Portland, Maine—are moving to require or coax developers to set aside some rental units in new developments for middle-income families, some of whom in pricier areas bring in six figures.
In Cambridge, home to Harvard University and the Massachusetts Institute of Technology, median rents have soared about 36% since late 2010 to $2,750 a month, according to Zillow, a real-estate information company. That’s higher than the median rents across the five boroughs of New York City, which run about $2,295, though not as steep as the $4,128 median rents in Manhattan.
“People who have been able to be here in the past without assistance are now facing challenges,” said Chris Cotter, Cambridge’s housing director, raising concerns “about a hollowing out of that middle.”
Advocates for the poor are skeptical of such programs, which they say divert attention from the most needy. “It is frustrating to hear about the use of scarce resources to serve higher-income households,” said Linda Couch, senior vice president for policy at the National Low Income Housing Coalition.
Nearly half of U.S. households making $30,000 to just under $45,000 a year pay more than 30% of their incomes on rent, considered a financially sustainable level, according to Harvard University’s Joint Center for Housing Studies. For renter households making $75,000 to $150,000, the share of cost-burdened renters is 5.5%.
Many policy makers say programs are needed to help middle-income people, too. “When we’re talking about the silent housing crisis, we’re not talking only about the low-income people…the people we’re talking about are middle class,” said Ron Terwilliger, a former real-estate executive and chairman of the Terwilliger Foundation, which advocates for affordable housing.
Mr. Cotter noted Cambridge already has a program for low-income residents that isn’t affected by the new initiative. The pilot program for middle-income housing relies on a zoning requirement and doesn’t require an additional city subsidy.
At the same time, incomes have largely stagnated in the wake of the recession. Nationwide, over the past five years, median rents have grown twice as fast as incomes, to more than $1,380 a month, according to Zillow.
Lee Herman recently won a New York City housing lottery aimed at middle-class residents, exchanging a cramped, outdated studio in a walk-up on Manhattan’s Upper East Side for a brand-new one in a Queens elevator building near the waterfront, with views of Manhattan. The 48-year-old bank employee, who has a bone condition, said he struggled to climb the stairs to the third floor in his old apartment.
Mr. Herman, who earns well over the New York City median household income of about $53,000, submitted one of more than 93,000 applications for 925 apartments in the Queens building, which opened to residents in May. His monthly rent of just under $1,700 is roughly the same as for his previous rent-stabilized apartment, but the new place is much nicer, he said.
“I was living in a disgusting apartment,” he said. “I had a choice between staying where I was or get out.”
In Jupiter, a seaside town of 59,000 in Florida’s Palm Beach County, local officials said the restaurant and hotel workers who keep the local economy humming were being forced to drive long distances to get to work. Most new construction has been single-family homes, not apartments catering to those workers.
“In the last 10 years people weren’t building the more affordable units,” said John Sickler,director of the planning and zoning department.
The town passed an ordinance in May requiring developers to set aside rental or for-sale units for low- and middle-income families or pay into a fund. These affordable apartments rent for as much as $1,850 a month for a three-bedroom, compared with market rents of about $2,000.
Cities have struggled to retain their middle class for decades. In the 1950s, New York designed a program known as Mitchell Lama that built some 140,000 units of middle-class housing. Back then, the program was designed to keep middle-class families from fleeing crime and poverty in the city.
Decades later, the city wants to help middle-class families who want to stay afford to do so. Most recently, Blackstone Group LP agreed to purchase the city’s most famous middle-income housing project, Stuyvesant Town and Peter Cooper Village. New York officials agreed to contribute $225 million to protect 4,500 units for middle-income tenants making up to $142,000 for a family of four.