Is Housing 'Out of Reach' for More Than Half of Workers?

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22-07-2025

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Happy Tuesday, and welcome to another edition of Rent Free. This week's newsletter includes stories on:
The passage of single-stair reform in Nashville, Tennessee
A new legal challenge to Seattle's affordable housing fees
How a zoning code dispute in Illinois could produce a rare full-service Popeyes franchise
But first, our lead item takes a look at the National Low Income Housing Coalition's latest Out of Reach report and its eyebrow-raising claims about the unaffordability of housing in America.
Can Half of Workers Really Not Afford To Rent an Apartment?
The National Low Income Housing Coalition (NLIHC) has released its annual Out of Reach report, which has once again found that a minimum wage earner cannot afford housing almost anywhere in the country.
This year's report, like every year's report, has led to a string of local headlines about how there is no affordable housing in this state or that county. The 2025 Out of Reach report will, like its predecessors, be used as a citation in many a housing think piece claiming that it's impossible for low-wage workers to put a roof over their heads.
As a media product, the Out of Reach report is very successful. The data within it are useful for showing what kind of housing is available where and at what price.
Certainly, housing costs are higher than they would be in a free market. The NLIHC's report highlights the undeniable reality that lower-income workers bear the brunt of these inflated housing costs.
Still, the dire picture the Out of Reach report paints is largely a product of its overly prescriptive definition of what it means to be able to "afford" housing.
The report therefore misses the many options lower-income people have for economizing on housing costs, even in the context of artificially high rents. It largely treats as illegitimate the tradeoffs people will always have to make when choosing where to live, even if prices were much lower and wages much higher.
The Out of Reach report's "signature statistic" is the "housing wage." That's the hourly wage a single person would need to earn working 40 hours a week in order to spend no more than 30 percent of his income renting a home priced at the U.S. Department of Housing and Urban Development's (HUD) Fair Market Rent.
Fair Market Rent is defined by HUD as the 40th percentile gross rent for a standard quality unit.
According to this year's report, the national hourly "housing wage" needed to afford a two-bedroom home is $33.63 and $28.17 for a one-bedroom unit. The report also calculates state- and county-specific housing wages based on local housing costs.
The housing wage is an interesting snapshot of housing costs vs. earnings. The Out of Reach report nevertheless comes to some strange conclusions by using it as the benchmark measure of housing affordability.
The report finds, for instance, that "nowhere in the United States—no state, metropolitan area, or county—can a full-time minimum-wage worker afford a modest two-bedroom rental home." Only in 7 percent of counties can they afford a one-bed rental.
If renting a midmarket, two-bed unit all by himself while spending no more than 30 percent of his income on rent were a minimum wage earner's only option, he would in fact be unable to afford housing anywhere. Yet minimum wage earners have options besides that.
They can rent smaller units. They can rent units priced below Fair Market Rents. They can split the cost of housing with a wage-earning partner or roommates. They could also just pay more than 30 percent of their income in rent.
None of these options is necessarily ideal. They're also not unreasonable things to expect a minimum wage earner to do to put a roof over his head. Yet the Out of Reach report largely treats them as unacceptable.
Living with roommates amounts to "overcrowding." Renting a lower-priced unit is living in "substandard" housing. Paying more than 30 percent of one's income on rent means your housing is inherently unaffordable.
The Out of Reach report similarly says that "more than half of all wage earners cannot afford a modest one-bedroom rental home at Fair Market Rent while working full-time. At least 60% cannot afford a modest two-bedroom rental home while working full-time."
Yet the vast majority of those wage earners are not currently homeless. Clearly they're meeting their housing needs somehow, despite not earning a so-called housing wage. Most likely, they too are making some tradeoffs between unit price, location, quality, and size.
The fact is that individuals and families are always going to have to make those tradeoffs at any price and wage level.
Lowering housing costs through deregulation—so that more housing, and more types of housing, can be built in more places—would certainly lessen the tradeoffs between housing costs and other desirable features.
Yet by ignoring that people do (and always will) make tradeoffs when finding housing, the Out of Reach report downplays what land-use deregulation can accomplish.
While calling it an essential part of an overall affordability strategy, the report says that "zoning reform alone cannot solve the affordable housing crisis, particularly for the lowest-income renters."
That's probably true if the goal is having every minimum wage worker spending no more than 30 percent of his income to live by himself in a midpriced, two-bedroom unit while working no more than 40 hours a week.
It's probably not true if the goal is to give that minimum wage earner more housing options, so that he and his partner can afford to live in a larger unit, or he individually can rent a room closer to work or school.
Free markets give people what they want at a price they're willing to pay. What they might be willing to pay for might be something different than what the Out of Reach report imagines they should have.
Nashville Passes Single-Stair Reform
This past Tuesday, the Metropolitan Council of Nashville and Davidson County passed a reform that will allow apartment complexes of up to six stories to be built with just one staircase.
This makes Nashville only the third city in the country to allow single-stair buildings of that size, behind Seattle and New York City.
Housing advocates have increasingly focused their efforts on liberalizing building code requirements that most multifamily buildings come with two staircases.
They say this requirement, justified as a fire safety measure, makes it harder for builders to construct multifamily developments on smaller lots. Allowing single-stair buildings will enable more small-lot development, as well as more flexible floor plans that feature more windows, they say.
"Nashville is too expensive. The goal of this legislation is not just to allow more affordable, middle-class housing but to allow better, higher-quality housing as well," says Council Member Rollin Horton, who sponsored Nashville's single-stair reform.
Earlier this year, Austin, Texas, voted to allow single-stair developments of up to five stories. Also this year, the Colorado Legislature passed a bill requiring larger cities to allow five-story single-stair apartments by 2027.
Property Owners Challenge Seattle's Affordable Housing Fees
I wrote last week about a new constitutional challenge in Seattle's Mandatory Housing Affordability program, which charges property owners "affordable housing" fees for adding even just one unit of housing.
A snippet:
Married couple Mehrit Teshome and Rocco Volker want to redevelop their single-family home into a smaller duplex and accessory dwelling unit. Local builder James Vert would like to construct four townhomes on his property.
The city's zoning code allows them to do this. But its Mandatory Housing Affordability (MHA) program would require them either to make two of their new units rent-restricted affordable housing or otherwise pay hefty affordable housing fees—roughly $36,000 in the Volkers' case and $126,000 in Vert's.
The MHA was created as a "grand bargain" between large developers, affordable housing groups, trade unions, and other stakeholders. Its "dual-approach" to housing supply allowed developers to construct larger residential projects across dozens of city neighborhoods. In exchange, projects in these upzoned neighborhoods would have to include rent-restricted affordable housing units or pay into an affordable housing fund.
Like other "inclusionary zoning" policies, Seattle's MHA program acts as a tax on new housing supply. Builders must absorb the costs of money-losing below-market-rate units into their projects.
A recent city-commissioned report found that the MHA's affordability mandates were acting as a "small but important" headwind on housing supply in Seattle's challenging building environment.
The Volkers and Vert are challenging these fees as an unconstitutional taking of their property. Similar constitutional challenges to inclusionary zoning, including to Seattle's program, have been unsuccessful. But the plaintiffs are hoping that with this new set of facts, and some recent Supreme Court rulings, they'll prevail this time.
Could a Local Zoning Code Force a Popeyes To Add Table Service?
A small but revealing zoning dispute out of Evanston, Illinois, shows just how micromanaging commercial zoning codes can be.
As the Evanston Roundtable reports, a local Popeyes franchisee, Karim Poonja, has withdrawn his application to open a new location of the fast-casual fried chicken restaurant. Instead, he's now asking permission to open a full-service Popeyes restaurant with waiters and table service.
That would be an atypical setup for a Popeyes to have. It might be a necessary setup if Poonja is going to get his restaurant approved by city officials.
Per the Roundtable, a fast-casual "Type 2" restaurant requires a lengthier approval process and third parties are allowed to appeal their approval.
That's exactly what happened in Poonja's case when a nearby health center appealed his "Type 2" permit application. The health center owner complained about the unhealthy food the restaurant would serve and the smell it would generate.
Poonja is now trying to avoid a lengthy land-use battle by applying for permission to open a "Type 1" restaurant. The land-use approval process for Type 1 restaurants is a lot more streamlined and does not afford third parties a chance to object.
But the zoning code requires a Type 1 restaurant to have customers order from waiters at a table, booth, or dining counter, and for the restaurant to use nondisposable flatware and dishware.
Should Poonja's new application be approved, one can thank zoning for creating the first upscale, full-service Popeyes restaurant.
Quick Links
Current Affairs has a new piece on how you're not "angry enough" about homelessness in America. That could well be true. Author Lily Sanchez's argument that homelessness has little to do with housing supply, and instead is a result of the "landlord class" limiting housing access, definitely isn't. After all, if landlords can set housing costs independent of supply and demand, you always have to ask, "Why aren't they setting the price higher?"
At Reason, Steven Greenhut takes California's conservatives to task for opposing zoning reform.
Also at Reason, Tosin Akintola reports on where rents are falling the most in America. (Spoiler: It's not in places that make it the most difficult to build.)
Washington state officials, making use of the state's new rent control law, are capping rent increases for next year at 10 percent.
At Vox, Rachel Cohen Booth reports on the effort to repeal HUD's chassis requirement for manufactured housing.
Shelterforce reports that an increasing number of cities and states are proposing and passing bans on landlords' using algorithmic pricing software. Read a past Rent Free on why these bans are misplaced.
The post Is Housing 'Out of Reach' for More Than Half of Workers? appeared first on Reason.com.