Housing assistance for six-figure families

It used to be that earning a six-figure salary meant a person had achieved a comfortable upper middle class lifestyle.

In many cities, that's no longer the case, thanks to sky-high rents that have outpaced wage growth for many professionals. That's leading to the newest twist in government assistance: housing help for those earning more than $100,000 a year.

Cambridge, Massachusetts -- home to the Massachusetts Institute of Technology and Harvard University -- has opened applications for apartments available to middle-income families in the city, or those earning a maximum of $118,200 annually for a family of four. While that might seem like a comfortable income, Cambridge residents face surging rents, with the average monthly cost of a two-bedroom apartment now hitting $2,750, a jump of almost 50 percent since the recession ended in 2009, according to RentJungle.

"Middle-class families making over $100,000 being offered assistance can seem shocking, but looking within these cities that tend to be more affluent, you aren't targeting the richest of the rich," said Sklyar Olsen, senior economist at housing data site Zillow. "They are on the upper side of the median, but not too far up."

The median income in Cambridge, for instance, is about 38 percent higher than the U.S. median, she said. The median rent list price for a two-bedroom apartment in Cambridge is now higher than in New York, where it's $2,600, according to Zillow.

Cities including San Francisco, New York City and Jupiter, Florida, are among those communities around the country that are asking or requiring developers to put aside some units for middle-class families, The Wall Street Journal reports. It's more typical for housing incentives to be geared to families making 80 percent of their area's median income, but increasingly there are conversations about the middle-class getting left behind, Olsen said.

Indeed, a growing number of middle-class families find themselves in the same boat as lower-income households: relying on government assistance to find or help subsidize their rentals.

What's caused the run-up in prices in cities like New York and San Francisco? It could be not only higher-paying jobs at tech and finance firms, but longer hours, according to a working paper published by the National Bureau of Economic Research.

While workers in the 1980s and earlier may have preferred to commute to the suburbs, people today are often working more than 50 hours a week. For many, that appears to be reducing the incentive to live in the suburbs and encouraging people to live in cities, boosting demand for housing in urban areas.

"Long hours render non-work time scarce, planting low-utility activities such as commuting in the cross-hairs. One of the simplest ways to control commuting is to live close to work, which for skilled workers may mean the city center," the researchers write.

Rising rents as higher-income workers crowd into cities also can put a greater financial strain on low- and middle-income families, with many metropolitan regions facing a severe shortage of affordable housing.

The rule of thumb to pay no more than one-third of income toward rent has flown out the window in many expensive cities. About one-quarter of American families spend half of their income on rent and utilities, according to Make Room, an organization that advocates for families who struggle with housing costs.

"We added more renters to this nation over the past last year than we ever did," Olsen noted.

While that signals a stronger economy, it also means more pressure on the housing market, especially as developers aren't building quickly enough to meet demand. Apartment rents are still likely to appreciate next year, although perhaps at a slower pace than in recent years, she added.

"What's been driving increase in rents is there is an imbalance," Olsen said. "It's hard to add supply quickly."