The nurse. The teacher. The firefighter. The police officer.
In times past, those careers not only brought respect but also a viable path to the Middle Class, where homeownership and long-term financial stability were the bedrock of the American Dream.
Now, however, in markets across the country, wages have failed to keep pace with the cost of living, and home affordability has become a seemingly insurmountable challenge for the majority of Americans.
Ninety-one percent of workers are stressed about their financial futures, according to BrightPlan’s latest Wellness Barometer Survey. That figure includes 75 percent of mid-to-upper-level professionals. A January Forbes report backed BrightPlan’s findings, with 55 percent of workers saying that housing affordability was their most crucial concern.
Into that breach, experts say, workforce housing initiatives have become one necessary, though not yet sufficient, solution.
Market failure and policy failure
Thus far, workforce housing projects are barely making a dent in the challenge of affordability, Realtor.com Senior Economist Jake Krimmel told Inman.
Jake Krimmel | Credit: Realtor.com
“I think the fact that workforce housing can be necessary or is a thing in the first place is really an indictment of the state of housing affordability in the country today,” he said.
“I think it’s important to ground any conversation about workforce and affordable housing in that reality,” he added. “It’s a market failure and a policy failure that someone could be a doctor, a teacher, or another kind of professional and cannot afford to pay the market rent or own a home outright.”
Workforce housing is a catch-all term that refers to rental and, in rarer cases, for-sale properties priced for households that earn between 60 percent and 120 percent of their area’s AMI. Workers at this income level often cannot qualify for federal housing vouchers, which require a household to make between 50 percent to 80 percent of the AMI for their region.
Depending on state and county rules, workforce housing can be subsidized with tax dollars or funded by housing trust funds and public bonds. Some employers have also stepped in to create housing options for their employees, either by funding new rental projects or converting commercial properties, like closed hotels, into housing.
Krimmel said it’s challenging to estimate the number of households currently relying on workforce housing.
The most widely cited estimate comes from a December 2018 CBRE study, which reported that 13.5 million households lived in workforce housing. However, a report from the Harvard Joint Center for Housing Studies said 14.4 million renter households made between 60 percent and 120 percent of their area’s median income (AMI) in 2024.
That would mean that demand for workforce housing has ticked up by at least 8 percent in the past six years.
“Buying power is down really significantly since before the pandemic, and also, obviously, since interest rates shot up beginning in around 2022,” Krimmel said. “But it’s also about how much our income is growing in relation to house prices, too.
“The average U.S. household, which makes $79,000 annually, can only afford about 28 percent of homes on the market right now. That is about as affordable as the New York market looked in 2019, and we all know how unaffordable New York City is.”
Deed-restricted homes are a lifeline
Jackson Hole, Wyoming-based broker Latham Jenkins knows about the affordability crunch all too well. He once relied on workforce housing when he first moved to the resort town in the 90s.
Latham Jenkins
“I lived the life of a worker who lived in a hotel because of the shortage of housing in the 90s,” he said. “This has never been new for these communities; it’s rather an ongoing issue, and there is no end to it. … There’s no profit in developing community (e.g., workforce) housing for the private market.”
Jackson Hole and similar markets — such as Lake Tahoe, California, and Vail, Colorado — have become the epicenter of the workforce housing movement, as affluent second-home buyers put pressure on inventory and home prices.
Jenkins said Jackson Hole has little room to expand and build new housing, as 97 percent of Teton County is federally protected land. So, the constraints on land and inventory mean full-time workers can’t afford to be in Jackson without community housing.
“Over the past 25 years, locally occupied real estate is now owned by those second homeowners, investors and virtual workers,” he said. “COVID simply threw gas on a problem that we had pre-COVID, which was the transition of our housing stock from locals to non-locals, in essence, or, I should say, to a population that’s not actually working in the community and requires services.”
Teton County has attempted to balance the scales with a workforce housing program aimed at households making 120 percent AMI. Renters and homebuyers must earn 75 percent of their income from a local business and work an average of 30 hours per week at said business.
Homebuyers must reside in their home for at least 10 months of the year and cannot own another home within 150 miles of Teton County.
Once a home is owned by a workforce program member, it becomes deed-restricted and must stay within the workforce ecosystem. Homebuyers must requalify annually and sell their home if they no longer meet the program standards.
Ross Collins
Jenkins said the workforce program has received pushback, as property owners partially fund it with affordable and workforce housing fees paid when building a new home or expanding an existing home.
“It creates animosity because the fee doesn’t work as intended, which is to tax those who are building second homes,” he said. “What we need is upzoning in the urban and dense urban core of the city.
“If our nurses, firefighters, and teachers can’t live here, then our community stops functioning. You can’t have a mountain town without the people who make it run — yet they’re the first to get priced out. It’s a question of whether we want to remain a real town or just a resort.”
Resort towns have become 1 economy, 2 markets
Better Homes and Gardens Real Estate Intelligence associate real estate broker Ross Collins and LUX Real Estate Company ERA Powered broker-owner Emily Duke echoed Jenkins’s concerns, saying that Tahoe and Vail have increasingly become a “tale of two markets” where deed-restricted homes have become the only chance for the everyday homebuyer to afford a home.
Emily Duke
Duke said that deed-restricted and workforce housing have grown in importance over the past two to three years, as median home prices have surpassed the $1 million mark.
Local and county municipalities have doubled down on workforce housing options, she said, with the Town of Vail creating 1,000 new deed-restricted units for local employees and businesses.
“Importantly, many of these programs are non-repayable and tied to permanent deed restrictions, ensuring that affordability is preserved for future generations,” she said. “That’s rare in resort markets and reflects a strong commitment to community stability.”
Collins said leaders in Tahoe and Truckee, California, are taking a similarly aggressive approach by limiting short-term rentals and bolstering down payment assistance and workforce housing programs to keep workers close to the communities they serve. However, it’s not enough to close the gap.
“Like many resort towns, Tahoe faces deep challenges in providing housing for the workforce that supports its tourism and service economy,” Collins told Inman. “A 2016 Tahoe Truckee Community Foundation study found an unmet demand of 12,160 housing units for workers commuting into the area — a figure based on a median home price of $538,000 at the time.”
“With today’s median price more than double that, the gap has only widened.”
Making the numbers pencil out
Jeff Tucker
Windermere Principal Economist Jeff Tucker said workforce housing isn’t a panacea for affordability, and works within an ecosystem of other housing and economic policies, such as upzoning, to create a more equitable market.
“A broad package of necessary reforms to make more housing construction possible in much of the country is a really important component of a long-term solution to the housing affordability challenges we face,” he said. Our current housing shortage “took years to develop. So it’ll take years to build our way out of it.”
The challenge with meaningfully increasing workforce housing options comes down to financing, he said. Lenders and developers already face challenges in securing funding for projects, and the rising cost of borrowing is making the road ahead even more difficult.
Although the current landscape looks grim, Tucker said agents can differentiate themselves by learning to make “the numbers pencil out” for their clients, tapping into all the resources at their disposal, including workforce housing, down payment assistance, and specialized programs for professionals such as teachers and first responders.
Today’s housing landscape is “a radically transformed marketplace,” Tucker said, “such a different playing field than the last generation or any previous generation really faced in getting into homeownership. It’s just a much higher hurdle.”
Jenkins, Collins and Ross said agents need to establish solid relationships with local workforce and affordable housing groups, so they have a timely database of contacts and programs that can help their clients gain an edge when deed-restricted homes or other workforce units become available.
“Buyers often don’t realize that multiple local, county, and state resources can be layered to maximize affordability. Guiding clients through that maze is where expert advisors truly add value,” Duke said.
“Equally important, agents have a role in policy advocacy,” she added. Staying engaged in local housing discussions, supporting innovative affordability measures and educating clients on the realities of deed restrictions help create a healthier long-term market.”
