Throughout the United States, middle-class Americans have been pushed out of the country’s most popular cities. Los Angeles, Austin, and San Francisco are just three of the “hot” cities that have witnessed increased rent prices, increased housing prices, and stratified income levels. Members of the middle-class end up moving to cities where the cost of living is cheaper, or they relocate to the suburbs. Today in America it seems that the cities belong to the wealthy who can afford expensive rent and housing prices and to the poor who are able to live in subsidized housing.

A Good Problem?

Macroeconomists believe that the current problem is actually a good thing. Wealthy people living in cities means that the overall wealth of the city grows. It might not matter to economists if the middle class has to move, but it does matter to the individuals who make up the middle class. What does it mean for society when a teacher whose school is in San Francisco, for example, can’t live in the city or neighborhood where she teaches? Experts believe that unless cities take steps to retain the middle class then the trend will continue.

Strict Zoning Laws

Zoning laws are one of the reasons why the middle class has such a difficult time staying in popular cities. Additionally when city residents hear “affordable housing” they immediately think of housing projects built during the 1970s. When developers are unable to build new housing and economic growth remains robust, rental prices rise. The “Airbnb effect” is also playing a role in driving up prices and reducing available housing. Owners are able to charge steep prices for their properties. The practice is incredibly profitable, and opponents claim that landlords often designate rentals as permanent vacation homes thereby removing them from the market for everyday people.

Giving The Middle-Class Access

If cities want the middle class to stay, it’s possible to reverse the current trend. Cities can start by changing zoning laws so that more houses are available to owners and renters. As more housing becomes available prices should decrease. Local governments could also demand that developers include affordable units when they build new projects. New York is one city that enforces a law like this. Cities could also offer tax breaks to developers that save housing for people who work in cities. Analysts also think that more cities will fight the Airbnb effect with new laws.

In the coming years, interest rates, as well as wages, are expected to rise. Both of these factors will help the middle class save more money which could contribute to a house fund. Although the current environment isn’t friendly to the middle class, in time it could reverse itself if cities make the right decisions.