Last week the Washington Post published a reasonable summary of the housing affordability crisis and the potential solutions to it, framed in a plea to the Democratic presidential candidates to prioritize it.
The authors begin by defining the crisis as “a severe lack of housing supply,” especially at the low end of the market. Not only that, nationally that supply is continuing to decrease and vacancy rates are plummeting. Even though an estimated 1.4M units are being built each year, the country loses 1.7M units due to old age or (increasingly) natural disasters. That’s 300K fewer units than we’d need to keep the housing supply constant, nevermind to start chipping away at the dearth. This limited supply correlates with unaffordability for the working class, they later quantify, “The median cost of rent and utilities is up 13 percent over the past nearly 20 years, median income is up less than 1 percent.”
They also call out some additional consequences of the affordability crisis, for example how it exacerbates the wealth gap. “An entire generation of families whose parents found in housing a critical path to building wealth, find it now blocking the way.” It also undermines labor mobility, which in turn diminishes the economy. Finally, it’s an obvious contributor to the increasing issue of homelessness in our cities.
So why isn’t there enough housing? The authors attribute the causes of the crisis to high government fees, stiff zoning restrictions, and the rising costs of labor and materials. These high costs, the authors argue, relegate development to the luxury end of the market.
The last third of the article is dedicated to solutions to the problem. As advice for national candidates, they focus on expanding existing programs to subsidize low-income development, the Low-Income Housing Tax Credit and the New Market Tax Credit, as well as the Opportunity Zone tax credit. The Housing Trust Fund and Capital Magnet Fund are also lauded. In addition, they recommend that municipalities ease overly restrictive zoning and lower high fees for new building, and in terms of federal policy, the government could incentivize those changes by making federal funding contingent on them.
The authors do acknowledge that building our way out of the problem will still take time, and recommend increasing funding to the federal housing voucher program, as well as increasing the value of those vouchers. They also mention rent control as a short term solution, but caution that “it may exacerbate the problem, by limiting the returns to builders and their incentive to construct more dwellings.”
I liked this article for the simplicity with which they illustrate the problem, coupled with their straightforward and specific solutions. I particularly like the idea of tying federal benefits for cities and states to progress made toward affordability. The part where I feel this article missed the mark is their explanation of the genesis of the crisis and their neglect of cities in that narrative.
My simplified version of the housing affordability crisis would center more around the increasing popularity of larger cities after decades of neglecting and restricting urban development in favor of single-family, suburban development further and further away from city centers. They do acknowledge, “In today’s economy, the best job opportunities are often in the nation’s big urban areas, but this is also where housing is least affordable,” but they don’t explicitly make the connection that the demand for city housing causes the higher prices. Instead, the article overemphasizes the role of increased building costs, and consequently the recency of the issue. They say the rise in materials cost is “driven in significant part by the trade war and higher tariffs,” even while noting elsewhere that the effects of the crisis were being felt far before Trump was elected.
Finally, by sidestepping cities’ role in the cause of the crisis they underemphasize them in their list of solutions. They say, “It would also make sense to increase the value of the vouchers to provide low-income families the chance to move to low-poverty, higher-opportunity neighborhoods,” but make no other prescriptions about density, only glancing the issue by recommending less restrictive zoning. Yes, we need to build more affordable housing and use public dollars to incentivize and accelerate that development, but new housing will do little good if it isn’t concentrated where people want and need to be.
