Is the Urban Middle Class Destined for Extinction?

Blogger Aaron M. Renn (aka: The Urbanophile) posted a link on Twitter to an interesting New York Times article that questions the affordability of Manhattan real estate for middle-income residents. The article discusses how market rates have shifted in the past 40 years, the difference between market rate and rent-regulated housing, and the near complete void of anything market rate that is affordable to the average family.

You can read the complete article here.

As a property-owner in an area of Cincinnati that is experiencing a renaissance, this issue hits really close to home. My husband and I are firmly planted in the middle-class. And we benefited from an opportunists’ real estate market a few years ago. But, were we to try to find a similar home now, it would be very difficult, maybe impossible. Heck, even a significant raise in taxes might make our home unaffordable.

Urban revitalization is a risky endeavor. But when we talk about the dangers of gentrification, we usually talk about how it will effect the poor, the homeless, those who depend on Section 8 and other “affordable housing” situations. We rarely talk about the way it will effect the rest of us–the working class and the middle class, those who benefit greatly from the amenities and accessibility of the urban environment. When the difference between the costs of subsidized housing and market-rate housing continues to increase, will there be anything left for the rest of us?

In a city like New York City, the middle class was being phased out decades ago. Am I crazy to think that Cincinnati could be inching toward the same problem, even if if happens on a much smaller scale? Similar to the outlying boroughs of NYC, there will still be neighborhoods of Cincinnati in which average families can purchase homes and rent affordable apartments. But, what about those of us who actually want to live downtown?

Some other things to consider:

-Let’s be honest: Having a family changes everything.

“One way to stay in Manhattan as a member of the middle class is to be in a relationship. Couples can split the cost of a one-bedroom apartment, along with utilities and takeout meals. But adding small roommates, especially the kind that do not contribute to rent, creates perhaps the single greatest obstacle to staying in the city.”- O’Leary, The New York Times

Since I believe that strong families are so important for the health of a community, I believe it’s absolutely necessary that there be a place for families to live in vibrant, thriving cities.

-Employers can help. It’s not unheard of for large employers–universities, hospitals, corporations, etc.–to purchase property and rent to employees at subsidized rates to aid in hiring, relocation, and job stability. What if event smaller businesses did this? What if there was a resurgence of business owners living within walking distance of their businesses and providing reduced-rate housing for their employees?

-There has to be a way to get in on the ground-level of development. One way that middle-income families make it work in Manhattan is that they have been around long enough that they secured their real estate before prices soared. They have, essentially, been grandfathered-in to the Manhattan lifestyle. Cincinnati’s downtown is still relatively affordable, but it may not always be. If you’re anything like me, you could not afford the new built-to-suit single-family homes in Over-the-Rhine. But many of us could possibly afford one of the remaining vacant properties that are ready for renovation. Securing these properties can be tricky and finding loans for their rehabilitation even trickier. So, it reasons to say that cities who wish to preserve a thriving middle class must encourage entrepreneurship and provide the means for early investment by those who have staying-power in their community.

I’m curious to know whether all cities experience this phenomena of a disappearing middle class and how they cope. I’d also love to know more about the rent-regulated properties in NYC. Who regulates them and what does it take to get ahold of a property? I’m also curious how Section 8 housing plays into the issue and when the number of government housing subsidies actually works against the working class to limit their housing opportunities.

Anyone want to chime in?