1 month ago
1 month ago
The composition of the American workforce varies significantly by metro market, and can include the public sector, local serving jobs as well as younger technology workers. In this post we’ll take a look at how small properties service the housing needs of the workforce in different cities.
As we discussed in a recent post looking at the relationship between small apartment properties (5 to 49 units) and the workforce on a national level, we define the workforce as the portion of a population earning between 60% and 120% of local Area Median Income.
While an expansion of multifamily loan programs from Fannie Mae and Freddie Mac have worked to strengthen workforce housing options across the U.S., many areas are in the midst of an affordable housing crisis. This is due largely to rising market rents, relatively stagnant wages and a lack of new affordable apartments being built. This has the effect of squeezing out inexpensive market-rate rental options for the workforce.
The chart below shows that workforce renters comprise at least 35% of the households in small rental properties for the majority of the largest metros. Gateway markets like New York, San Francisco and Boston are an exception to this trend.
The visualization below represents the spread between the two lowest income categories (at or below 120% AMI) over the highest income category (above 120% AMI). The metro areas at the bottom of the chart see a higher average share of income going towards rent, hence are less affordable.
Now let’s take a look at the profile of workforce renters living in small properties. Unsurprisingly, the line of work varies by metro area. This is a result of a diverse set of age demographics and occupational characteristics.
As the chart below shows, the legal, community and local serving occupations typically comprise the bulk of the workforce segment. That being said, STEAM jobs — which we’ve previously defined as STEM (science, technology, engineering and mathematics) plus arts, finance and management — play a significant role in several of these markets. (The bottom of the post has a chart showing which occupations fall under which categories.)
Unsurprisingly, San Francisco has the higher STEAM component at 34%. Boston and Philadelphia also have high STEAM components. Since the STEAM industries are associated with incomes well above 120% of AMI, these are likely workers at the start of their careers.
For small property owners and operators, the successful leveraging of GSE programs targeted at the workforce segment can benefit from a deeper understanding of the local labor market and worker demographic profiles, and product preferences.
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