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 are so low that a household with two full-time workers would earn less than the ELI income threshold.
The number of low-income working households in MA has increased since 1990, while mid-wage occupations have declined and middle -income households along with them. A 2016 Urban Land Institute study found that in Metropolitan Boston, the number of very low income or extremely low-income working households grew by over 70,000 from 1990 – 2014, while the number of middle-income households fell, and high-income households grew by 140,000. The ability of these households to outbid and gentrify when supply is scarce is a major factor in the price escalation we have seen.
Households also grow their income as they get older, and the desire to upgrade is an important part of housing demand. Past age 65, most households see their income declining as members retire and become dependent on retirement income and public assistance.