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Assume that the availability of middle-income housing in the local market declined by 10% over the past five years and remains lower than that of high-income housing. Some have argued that the inadequate supply of houses in this income bracket is bordering on “crisis’ situation. Persons on the lower range of the middle-income bracket have been particularly impacted as low supply pushes prices out of their affordability reach. As the options to purchase their own homes become increasingly difficult the need for rental continue to increase which negatively impacted prices in the rental market. The demand and supply for the middle-income housing market is represented by the diagram Figure 2.
Label the diagram in figure 2 identifying the curve that applies to “middle-income home buyers” and ‘middle-income home providers” as well as the
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