Despite being home to 35 million Americans of every family type, race, ethnicity, age and occupation, the vast "middle market" of the rental housing sector has been largely overlooked by policy makers and analysts, according to a study conducted by the Joint Center for Housing Studies at Harvard University and commissioned by NMHC and other housing groups.
Middle Market Rentals: Hiding in Plain Sight is the first study to comprehensively examine the significant equity investment, debt finance and brokerage opportunities in the middle rental market as well as the role this sector plays in meeting our nation's housing needs. The report analyzes the middle rental market on a national and regional level and includes a detailed examination of four metro areas -- Boston, Los Angeles, Tampa and Minneapolis.
The report offers new insight into this market sector. For instance, it finds that unlike some federally subsidized housing, middle market rentals are not geographically concentrated. Nearly every census tract in the four cities studied have at least a few middle market rentals, suggesting that consumers looking for moderately priced units can find them in a wide range of locations and neighborhood types.
Contrary to the popular belief that almost all new construction is aimed at the top of the market, the research finds that an equal number of new units are built for the middle market as for the top fifth of the rent distribution.
It also finds that middle market rentals are an important source of future housing for the lower market. Policy makers concerned with low-income housing need a better understanding of the mechanisms in which middle market housing trickles down. One quarter of the units that will qualify for rental
subsidies in 10 years will likely filter down from today's middle market. Because so much middle market housing ends up filtering down to the lower market as it ages, policy makers who want to expand housing opportunities for both working families and low-income families would do well to consider the regulatory obstacles and costs of developing middle market rentals throughout their communities.