Welcome to The Poverty Trap, a newsletter and podcast for people who are fed up with the inequality baked into America’s system and want to individually and collectively make change.
“…they [middle-income earners, like teachers, nurses and other skilled workers] can afford only 21.2 percent of all available listings. That’s up from 20.8 percent a year ago — but a far cry from the 49 percent they could afford in 2019.” The New York Times, June 26, 2025.
Home ownership is the American Dream, but not everyone wants in on the deal. Many Americans choose not to buy a home: some don’t want the responsibilities of home ownership, others want a more free lifestyle so they can pick up and move across the country for a job opportunity, for example, without having to sell a home.
But for a growing number of Americans, it is not a choice. They simply don’t have the cash for a down payment and a yearly income to qualify for a mortgage that includes interest and property taxes based on the current market, which is flush with higher priced homes. And an increasing number of these folks are solid, middle-income earners, like teachers, nurses and other highly skilled professionals, defined as making at least $75,000 a year, and who want the security and opportunity to build wealth that comes with owning a home. In fact, middle-income earners make up the largest share of our country’s households, according to a May 2025 report by the National Association of Realtors.
A yearly income of approximately $75,000 (and a good credit score) can get you a $255,000 home, a price point that is increasingly rare in today’s market, with inflation, and now tariffs hiking the cost of building materials, higher interest rates on mortgages, and often higher property taxes.
And for lower-income families that make up a third of U.S. households, forget about it: “…they have almost no access to for-sale homes", according to a recent article in The New York Times.
The graph above, from the U.S. Census Bureau, shows that the overall rate of homeownership has gone up and down by several percentage points over the last six decades, the trends marked by recessions, looser lending practices and a once-in-a-hundred-year pandemic. Currently, the “65% home ownership rate is 1.3 percentage points lower than the [previous] 25 year average of 66.3 percent”, according to the Census Bureau. And this drop translates into approximately 1.7 million more American households that are either renting, looking for a rental property or living with family and friends.
Meanwhile, back at the suburban ranch, “renters are taking over the suburbs” according to a New York Times article published last month. The suburban communities surrounding 20 of the largest metro areas in the country have more than doubled their number of renters in just the last five years:
In an attempt to implement a more strategic direction when it comes to housing construction, developers are shifting their attention away from downtowns, urban cores and main cities. Instead, they are focusing on expanding outwards, toward the towns and suburbs surrounding cities proper, to be able to provide renters with more space and better amenities. Point2 Point, A rental home service.
I don’t think this trend is as benign as Point2 Point spins it. Developers, home builders and leaders in the burgeoning “Build-to-Rent industry see a collapsing market for homeownership among households earning about $50,000 to $90,000 a year, which makes up the largest percentage of households in the country. And they are capitalizing on the soaring costs of home ownership by providing a new crop of single-family rental homes in the suburbs. Yes, these mega investment firms are providing new housing for many in need of, well, housing, but at what long-term cost to the tenants who have little choice, the ever-increasing gap between the rich and the poor and our overall economy? See the 10 year upward trend in the Build-to-Rent industry shown in the nifty graph, below.
I wrote about first-time homebuyers being shut out of the housing market nearly two years ago, and the impact that delay in purchasing a first home would have on their ability to build wealth and pass on generational wealth, thus increasing inequality. And now the barriers to homeownership are spreading to higher income groups and more categories of buyers.
At the time, corporate landlords like Blackrock, Inc. and many others concentrated on buying “starter homes” in less desirable neighborhoods and renting them for exorbitant prices.
Now the focus of investors is to build rent-only planned communities—it’s a lot easier business model than buying up single-family homes here and there, with more money to be had. Wolf Richter, author of “Wolf Street”, a newsletter about business and finance, wrote about the Build-to-Rent business last year, and its genesis is quite interesting.
These are the same landlords — American Homes 4 Rent and Invitation Homes — that were formed in 2012 at the end of the Housing Bust to buy these houses for cents on the dollar out of foreclosure. They know what they’re doing.
For example…
American Homes 4 Rent [AMH] began adding build-to-rent single-family developments in 2017 and is now largely “focused,” as it said, on adding build-to-rent single-family properties through its own homebuilding division, AMH Development Program, for communities of rentals. In addition, it is buying some build-to-rent houses from third-party homebuilders.
I don’t think the suburban sprawl of single-family home rental communities is the best way to provide housing for the millions of Americans shut out of the home ownership market. But I do think the City of Baltimore has a much better solution, spearheaded by its young mayor, Brandon Scott. The city started a 15-year renovation project of blighted neighborhoods, razing some homes and rehabbing others for lower income buyers—specifically to promote home ownership by individuals, not corporations.
For Mr. Scott, 41, who was already planning to run for mayor when he was in elementary school, resurrecting neighborhoods that were left behind was a priority. “To be a true son of Baltimore, I had no choice other than to say we are going to step up in a big way to solve this problem,” Mr. Scott said in an interview.
Funny that a few days ago, President Trump called the City of Baltimore “too far gone” to even consider “saving” by occupying it with U.S. soldiers. And here’s how its forward -thinking Mayor responded:
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How do you feel about middle-income home buyers being shut out of the housing market, the growing trend of more suburban sprawl, this time with more renters than owners, Build-to-Rent communities with corporate landlords, the City of Baltimore’s home rehab project? Please leave your thoughts in the Comment Section below.
