10/15/2025
Addressing middle-income demand: Trends, tools, and challenges
Explore key trends in middle-income housing and tools for developers. Read more for insights from the NCHMA conference.
Recent discussions among housing market analysts at the National Council of Housing Market Analysts (NCHMA) have surfaced several important trends shaping the affordable housing landscape. Analysts are interpreting current housing metrics and cumulative rent and income trends to better understand market dynamics. A particularly notable insight is the growing momentum behind middle-income housing programs — typically managed at the state or local level — and the challenges in quantifying demand for these initiatives. This underscores the need for more refined data strategies and localized market analysis.
Federal gaps and legislative developments
Currently, no federal housing program specifically targets the middle-income market, which generally includes households earning between 60% and 120% of the area median income (AMI). The One Big Beautiful Bill Act (OBBBA) is expected to bolster Low-Income Housing Tax Credit (LIHTC) development by permanently increasing 9% credit allocations by 12% and reducing the private activity bond threshold for 4% credits from 50% to 25%. However, because LIHTC typically serves households earning up to only 60% of the area median income (AMI), it does not fully address the needs of the middle-income population.
While it is not uncommon to see LIHTC properties in high-cost areas with units at the 80% to 150% AMI levels, the bulk of developments target households earning between 30% to 60% of AMI. The middle-income population segment often earns too much to qualify for typical LIHTC developments but may still be considered rent burdened in their primary market areas.
State and local solutions for middle-income renters
Recently, state and municipal governments have begun addressing the middle market’s affordability challenges through the implementation of new local housing programs. The growth of these programs in the last few years has opened new opportunities for affordable developers and investors to serve this overlooked market. These new middle-income programs are spread across the country and are mostly focused on new construction. Virtually all the programs use a percent-of-AMI threshold in order to determine household eligibility. Most of the programs fund developments via grants and loans, though various programs may also include bond financing and deferred loans as funding mechanisms. The affordability periods vary significantly, ranging from three years to permanent affordability.
The following table, according to the National Housing & Rehabilitation Association, details a selection of these initiatives:
| Program Name |
Location | AMI Levels Targeted |
|---|---|---|
| Workforce Housing Investment Program | Virginia | 80% - 150% |
| Middle-Income Housing Tax Credit (MIHTC) | Colorado | 80% - 140% |
| Moderate Income Housing Program | Kansas | 60% - 150% |
| Workforce Housing | Missoula, MT | 60% - 140% |
| Build for CT – Workforce | Connecticut | 60% - 120% |
| Rural Workforce Housing Initiative | Georgia | <100% |
| Middle Income Housing Program | New York | 60% - 130% |
Development challenges and market study considerations
Engaging in middle-income development comes with unique challenges to which developers and market analysts must pay special attention. Developments will still need to prove rent advantages over market-rate units in the primary market area. Because of this, a potential development should aim to be competitive with market-rate properties in terms of in-unit amenities, property amenities, and overall quality; this will assist in demonstrating higher achievable market rents and contribute to a stronger rent advantage. Property management should also ensure efficient onboarding and paperwork processes for new tenants, as some tenants may prefer paying slightly higher market rents over enduring the paperwork required for affordable units. Given that most markets have more low-income than middle-income developments, it may also be a challenge to find comparables serving households in the 80% to 120% AMI range. Market analysts must be mindful in identifying which properties are most comparable to the subject and conduct thorough research to ensure that properties with similar AMI levels are being appropriately compared.
Supporting developers with market intelligence
The growing focus on middle-income housing reflects a critical shift in affordability strategies, as state and local programs step in to fill gaps left by federal policy. As these initiatives evolve, success will depend on improved access to data and thoughtful market analysis. Similar to LIHTC applications, middle-income programs typically need market studies completed as part of the application and underwriting process.
CohnReznick serves developers and syndicators across the nation with NCHMA and state-specific compliant market studies, rent studies, and appraisals. Contact our team with any questions about market studies or to request a market studies or to request a market study for your next deal.
Lauren Migliore
Senior Manager, Valuation Advisory
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This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.