Across the country, a growing number of cities are grappling with problems stemming from high housing costs. Once confined to large urban centers, the symptoms of an affordability crisis are appearing in cities of widely varying size and geography. High costs are also hitting a broader segment of the population – concern for affordable housing is no longer limited to low-income households. Solidly middle class professionals such as nurses, teachers, and first-responders are struggling to rent or buy housing in the cities where they work. For low-income households, high-housing costs force impossible choices between buying basic necessities or paying rent, and heighten the risk of housing instability and homelessness.
As the gravity and economic cost of this national crisis grow, a federal response seems both appropriate and overdue. Yet while federal resources are a key piece of the puzzle for housing low-income households that the private market leaves behind, federal action is not sufficient. Effectively addressing the root causes of high housing costs requires local governments to play a leading role.
The good news is that local leaders have a range of policy tools at their disposal. Their challenge is to develop comprehensive and balanced housing plans that are responsive to local conditions and contain clear, measurable goals. To help local governments create these plans, the NYU Furman Center and Abt Associates recently launched LocalHousingSolutions.org, a resource for local housing policy grounded in the guidance of the National Community of Practice on Local Housing Policy.
A comprehensive and balanced strategy to tackle high costs requires the development of both market-rate and subsidized housing. The private market will never create housing for the lowest-income households, since the cost of developing and operating homes for this population segment is still higher than the rents these households can afford to pay. Thus public funding and support are essential to build and preserve subsidized housing. Federal resources are the primary vehicles for financing subsidized housing, but local policy plays an important role in allocating these limited funds to maximize their effectiveness. State and local policy makers can also use land-use powers to encourage or require the development of affordable units and have numerous options to generate additional revenue that can be used for affordable housing.
It is also critical, however, for localities to reduce barriers to new supply more generally. In a well-functioning market, increases in demand are met with increases in supply that moderate price increases. Yet the housing markets in most high-cost cities, towns, and counties do not work this way, leading to an insufficient supply of new housing. To improve housing affordability, community leaders must adopt policies that encourage the production of additional housing units. For many, the most important step is to change land-use regulations to house more people on the same sized lot .
Establishing a clear, predictable development process that minimizes the need to seek special approvals or permits in order to build new housing is also important. The uncertainty associated with the approval processes slows down the development timeline, and can prevent new development from happening at all. More efficient land-use and a streamlined process can change a housing market from one that is fundamentally broken to a normally functioning market where increases in demand result in new supply that can moderate rent growth across the board and minimize the government support needed to write down rents in subsidized housing.
A locality armed with a plan to stimulate robust construction of both subsidized and market-rate housing is well on its way to greater affordability. But an effective local housing policy requires more than just building new homes; it should also consider demand-side strategies to help people afford them. Pre-purchase housing counseling and down-payment assistance programs help low- and moderate-income households become homeowners, while mitigating the risks associated with predatory lending practices. Voucher assistance and mobility strategies can help low-income families find and afford homes in neighborhoods with higher quality public services and opportunities to find employment, which research shows has numerous long-term benefits, particularly for children. Further, efforts to root out housing discrimination are essential to break down barriers that block certain groups of households from reaching new homes.
Finally, a comprehensive and balanced housing strategy should incorporate measures to promote housing stability and improve the quality of existing housing and neighborhoods. The same market demand driving high housing costs can price out longtime residents, perversely risking a public backlash to many of the essential strategies that can keep costs in check. It is thus vital that local policy makers directly address these displacement fears with a strong commitment to housing stability through programs focused on eviction and foreclosure prevention. In addition, by expanding access to capital for both single and multifamily homeowners, local governments can help keep older housing stock in a state of good repair.
Housing affordability can seem like an intractable problem – an issue where local policy makers are powerless in the face of national economic forces. The reality is quite different. Using existing policy tools and funding sources, local governments can advance housing strategies that promote affordability, stability, quality, and choice.