Stop Selling Market Rate Housing to Communities Without Markets

There’s a conversation happening in development circles right now that needs to be challenged.

Developers and city planners are talking about bringing “market rate” housing to low-income communities. They’re positioning it as the solution. The missing piece. The thing that will finally turn these neighborhoods around.

But here’s what nobody’s saying: you can’t create market rate housing in a community that doesn’t have a market.

Let me be specific.

The Missing Middle That Isn’t Missing

Recently, there have been conversations about the shy block builder concept. The pitch is simple: there’s a “missing middle” in housing, and we’re creating housing to fill that gap.

Market rate housing, they call it.

But, here’s the problem: You can’t put market rate housing in a low-income community and call it market rate just because you want it to be. The market makes it market rate. Not your press release.

In communities where the area median income is nowhere near what it needs to be for actual market rate investment, this doesn’t work. The threshold for market rate investment is $75,000. There’s not a Black community in Chicago that reaches above $55,000, and that’s only one of them.

The $75,000 figure isn’t a magic cutoff. It reflects roughly where national household income sits and serves as a directional marker for what conventional, unsubsidized underwriting tends to require. The issue isn’t whether the number is $72,000 or $78,000. The issue is the structural distance between local Area Median Income and the income levels that organically sustain true market-rate investment. That distance defines whether a market exists at all.

So when developers talk about bringing “market rate” housing to these neighborhoods, what they’re really doing is diagnostic work at best. And at worst? It’s a gaslight.

What Actually Creates Market Rate

You want to know what makes housing market rate? Let me walk you through it.

When people go on Zillow, on Redfin, on Compass, they’re looking at scores.

• School ratings
• Walkability
• Proximity to grocery stores
• Job availability
• Cultural opportunities

In many of these communities, schools score low. Some score a 1 out of 10. One being the worst. Low walkability, high crime, and limited economic development.

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