No U.S. State Offers Affordable Housing on Minimum Wage, Increasing Demand for Coliving

Written by:

Rudi Davis

Date:

01 Mar 2026

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No state in the United States offers affordable housing for minimum wage earners, according to Clara Arroyave, Founder and CEO of Coliving Cashflow. This affordability crisis is increasing demand for coliving as tenants choose between unaffordable solo living and shared housing to reduce costs. The gap between wages and housing expenses is widening, and Arroyave says this reality is turning coliving from a short-term trend into a long-term asset class for investors.

“There is not one state in the United States where the cost of living is affordable for someone earning minimum wage,” Arroyave says. “That small fact is the fact that drives the money.”

The affordability problem extends beyond low-income workers. Young professionals, graduate students, and even residents over 55 are opting for coliving because traditional rentals are either out of reach or do not make financial sense. Arroyave notes that the tenant base for coliving is more diverse than many investors realize, spanning a range of ages and income levels. The consistent factor is that housing costs have outpaced income growth, and coliving provides a way to close that gap.

Coliving Attracts Diverse Demographics Beyond Low Income Renters

Many investors mistakenly believe coliving is only for those earning minimum wage or living below the poverty line. Arroyave says this misconception leads them to underestimate both the size and quality of the potential tenant base.

“A lot of people think coliving is only for people who make minimum wage or less, who are under the poverty level, and really nothing further from the truth,” she says. In high-cost cities like New York and Boston, coliving tenants often include young professionals, graduate students, and international students. These renters may be able to afford traditional apartments, but they choose coliving for flexibility, community, and shorter lease commitments.

The 55-plus demographic is also growing in coliving. These residents are not ready for assisted living but want the convenience and social interaction that coliving offers. Arroyave says many in this group are in transition, traveling, or seeking new social connections after retirement.

There is also a luxury segment in coliving. Properties with high-end finishes, strong amenities, and professional management attract tenants willing to pay above-market rates for convenience and community. The model works across income brackets because it addresses two ongoing issues: housing affordability and social isolation.

Housing Affordability Challenges Are Structural

Coliving demand is not a response to a temporary economic downturn or a short-term spike in rents. Arroyave argues that the affordability crisis is structural, stemming from decades of wage stagnation and rising housing costs. Minimum wages have not kept pace with inflation, and rents in most markets remain unaffordable for a significant share of the population.

“People who use coliving have two choices. They either do not want to live alone because of loneliness, or they cannot afford a basic studio apartment in their market,” Arroyave says.

This long-standing imbalance means coliving demand will persist even if interest rates fall or new construction ramps up. The gap between wages and housing costs is too large to close quickly. Broader trends such as remote work, delayed household formation, and an aging population are reinforcing the need for flexible and affordable housing.

Arroyave predicts coliving will become as established as short-term rentals within three to five years. The sector is still early in its growth, but the fundamentals are strong. Investors who recognize the long-term nature of this demand are moving to capture market share before the opportunity becomes mainstream.

Regulatory Changes Support Coliving Growth

While short-term rentals face tighter restrictions in many cities, coliving is experiencing a more favorable regulatory environment. Historically, many states and municipalities have limited the number of unrelated individuals who can share a residence, often capping occupancy at three or four. These rules, based on outdated zoning codes, are being reconsidered amid worsening housing affordability.

Arroyave points to states like New Hampshire, Arizona, and Washington, where regulations are changing. Some jurisdictions now allow 20 or more unrelated people to live together, reflecting a shift toward recognizing coliving as a valid housing solution.

This regulatory change is significant because it removes a key barrier to coliving’s growth. Investors who were cautious due to zoning issues are finding that local governments are more open to coliving projects, particularly in areas with severe housing shortages.

By contrast, short-term rentals face increasing restrictions. Policymakers appear to view coliving as a way to address housing shortages, not as a problem to be curbed. This regulatory divergence is making coliving a more stable and attractive option for investors compared to short-term rental models.

Coliving Cashflow Expands Investor Services

Coliving Cashflow, led by Arroyave, operates as an independent platform offering investment strategy, operational guidance, and education for coliving investors. The firm has analyzed more than $1 billion in properties across 500 markets over the past two years and advises portfolios totaling over $200 million. Arroyave emphasizes that the firm’s approach is driven by data, not anecdotes, helping investors identify promising zip codes, properly underwrite properties, and structure financing to match cash flow.

“All we do, all operations, and everything our investment team does is based on data. We have nationwide data on the best zip codes to invest in,” Arroyave says.

The firm is launching a coliving calculator and a 90-day coaching program to help investors avoid common mistakes. Arroyave notes that many new investors enter the sector without adequate education, leading to poor underwriting, suboptimal financing, and operational failures. Her goal is to professionalize the industry by equipping investors with the tools and knowledge required for success.

The Future of Coliving in the U.S. Housing Market

As the structural affordability crisis persists, coliving is emerging as a lasting feature of the U.S. housing market. Investors who understand the deep-rooted nature of the demand and use data-driven strategies are positioning themselves for long-term success. Rather than a passing trend, coliving is becoming a core part of how Americans access housing. It offers flexibility, community, and affordability in a market where traditional options remain out of reach for many. The regulatory environment and shifting demographics are accelerating this change, making coliving one of the most resilient and adaptable segments in the real estate landscape today.