While higher income households are a major driver of demand and price escalation, most households are moderate or low income. There are many ways to categorize income. In this plan we use Area Median Income (AMI). Using the AMI scale has both value and limitations.
Most low-income households, including many classified as Extremely Low Income (ELI), include one or more members who are a member of the workforce. However, wages in many occupations remain so low that households with two full-time workers can still fall below the ELI threshold.
The number of low-income working households in MA has increased since 1990, while middle-wage occupations have declined, shrinking middle-income households. A 2016 study by the Urban Land Institute found that in Metropolitan Boston, the number of very low or extremely low-income households increased by over 70,000 from 1990 – 2014. Over the same period, high-income households increased by 140,000, while middle-income households decreased. In a housing market with limited supply, higher-income households are often able to outbid those with lower-incomes, contributing to gentrification and driving up housing prices.
Household income generally increases with age, driving higher demand for housing upgrades as people progress in their careers. After age 65, however, most households see their income declining as members retire and become dependent on retirement income and public assistance.