Middle-Class Renters Finally Noticed in New Federal Housing Measure

A new federal housing effort has directed the Government Accountability Office to study a formal income definition for the middle class, roughly 80 to 120 percent of area median income, and to recommend where that band fits in national housing policy. For the households in it, the recognition is overdue. For years, the renter earning around 90 percent of AMI has fallen through the middle of the system: too well paid to qualify for subsidized affordable housing, not well paid enough for new Class A apartments.

Ron Kutas, Chief Executive Officer of OneWall Communities, has built a workforce-housing portfolio around that renter for 15 years. His reading of the new measure is that it matters more as a signal than as a solution, and that the way it is being described is already wrong. Kutas clarifies that the measure does not define workforce housing; it orders the GAO to study the question and recommend a middle-class income band. “Washington hasn’t specifically named it,” he says, but the request itself is an admission that something in the framework has been missing. The practical value, in his view, is future leverage: once a federal standard exists, lenders, investment committees, or city councils can point to it rather than argue over what the words mean.

Kutas frames the gap in terms of who the renter has become. Earning 80 percent of AMI, he argues, is now what counts as middle class, where it once took 60 percent to live comfortably. Inflation, the cost of goods, and the economics of running older apartments have moved the line. The people in that band are teachers, nurses, police officers, and warehouse supervisors: households that do not need a subsidy, but that do need a policy keeping the housing they rely on from disappearing. However, most of the measure carries no appropriation, limiting its near-term impact. Kutas sees the higher FHA multifamily loan limits as the best provision, finally catching up to what buildings actually cost, while a restriction on large institutional investors buying single-family homes is mostly presentational. He would prefer policy focus on preservation, as the country has an aging stock of workforce apartments and the economics of maintaining them are getting harder. Grants or incentives to reinvest in these assets, in his view, would do more than another label. For new federal guidance to be trusted on a real deal, Kutas names three needs: speed (HUD financing can take up to nine months to close), compliance (a workforce-eligibility regime that mirrored affordable-housing rules would put the product out of reach), and certainty (no one will underwrite a ten-year hold on rules a new administration can rewrite in two). Even naming the gap, Kutas allows, is a win. Whether the measure becomes more than a name will depend on funding and on guidance that has not yet been written. For now, the middle-income renter has been noticed, which is not the same as being helped.