What's the Solution to the Affordable Housing Crisis?

The real estate market has been booming for the last few years.  While this is good news for some – particularly wealthy real estate investors and homeowners with stable income-earning opportunities – it's made it even more challenging for impoverished and low-income families to find housing.  The real estate boom has essentially poured gasoline onto what was already a glaring problem.  with the affordable housing crisis getting worse, millions are wondering if there are any viable solutions around the corner.

Understanding the Problem

The National Low Income Housing Coalition publishes regular reports on the shortage of affordable housing and how it's impacting renters and prospective homeowners.  In recent years, the data have been discouraging.

As one report reveals, "[t]he U.S. has a shortage of 7.2 million rental homes affordable and available to extremely low-income renters, whose income is at or below the poverty guideline or 30% of their area median income.  Only 35 affordable and available rental homes exist for every 100 extremely low-income renter households."

Research from other independent groups and coalitions reveals similar results.  According to the Monroe Group:

  • There isn't a single county in the United States that can fill 100 percent of its low-income population's needs for safe and affordable housing.
  • More than 11 million Americans pay more than half of their salaries on rent.  The number of renters in this category has ballooned by 30 percent over the past five years.
  • To afford a basic two-bedroom apartment in the U.S., renters need to earn an average of $20.30 per hour.  Considering that minimum wage is just $7.25 per hour, a renter would need to work 112 hours per week to afford a modest two-bedroom rental.

Clearly, something is broken.  Though promises have been made on both sides of the party line, little has been done to solve the issue.  Whichever party is out of office likes to pin the blame on the party that's in office.  The roles then reverse when a new party seizes control.

Recently, President Donald Trump has caught a lot of flak for his decision to cut funding to some of the affordable housing programs.  While there's no doubt he's slashed some of the resources, most conservatives agree with the decision.  President Trump isn't anti-affordable housing – he's merely against publicly funded affordable housing (at least to the degree that those on the left prefer).

Four Possible Solutions

Trying to publicly fund affordable housing solutions through taxpayer money hasn't worked over the past couple of decades.  It's time for a fresh approach, and the current administration has an opportunity to encourage, facilitate, and even mandate new strategies.  Having said that, let's explore some possible solutions:

  1. Encourage Investments in Old Buildings

Everyone wants to talk about lowering rents on existing structures or building new affordable housing.  But why are these the only options?  Take a look around any city or metro area, and there are boarded up buildings, vacant apartments, or old government buildings that are no longer in use.  Finding ways to use these spaces and up-fit them into affordable housing units is far more cost-effective.

Some municipalities around the country are already looking into this – including a few in the D.C. area.

"[One] report suggests more re-imagining of library spaces, fire stations and schools," The Washington Post notes.  "In Alexandria, 64 units were created at an old fire station near Potomac Yard; Arlington is considering land near the East Falls Church Metro station."

These revitalization projects will have to make sense to proceed.  A half-hearted approach could actually do more harm than good.  But in some cities, successful projects like these may alleviate a lot of the pressure.

  1. Normalize Tiny Living Solutions

There seems to be an expectation that everyone deserves a spacious place to live.  But in cities that are becoming overcrowded, there simply isn't enough space to provide large apartments and homes for everyone.  Normalizing tiny living solutions could go a long way toward maximizing space and creating cost-effective housing.

When presented with the option, most renters would prefer a well designed tiny house with premium features to a cheaply built home with some extra square footage.  Local housing boards can encourage tiny living development by funding builders and relaxing zoning restrictions.

  1. Create Tax Incentives for Employers

Employers can often help employees out with housing.  Mandating assistance will never work, but incentives could.

State governments would do well to consider incentive programs where employers are rewarded with tax benefits and credits for covering a portion of their employees' rents or mortgages.  This would alleviate some of the financial burden from corporations, while giving employees a chance to live in affordable housing that's within a reasonable proximity to their place of work.

  1. Use Funds Responsibly

Public housing handouts do little to encourage individuals to escape their situation and move toward home ownership.  In fact, many low-income individuals work hard to stay within a certain income bracket so they can continue to receive free housing.  In this sense, these programs discourage people from moving up.

The solution could be to use public housing funds more strategically so that low-income families receive the help they need while simultaneously being prepared for financial independence down the road.  Some cities, like Cleveland, have already begun to do this.

"A new six-unit housing development called the Glencove (the building once housed a tavern by the same name) offers artist housing with a slight twist," Patrick Sisson writes for Curbed.  "Residents earn bonus equity every month they pay rent, up to $10,000 over the course of 10 years, which can then be used to pay for a down payment on a studio or home.  It's a pilot artist-ownership model that pushes renters toward more permanent housing."

Similar programs could be successful in other cities.  Incentives like these encourage renters to look beyond today and plan for the future (while getting some much needed assistance).

There's plenty of room for like-minded programs to be reviewed.  For example, what would it look like if subsidized housing programs set aside funds each month in designated saving accounts that renters couldn't touch until they were ready to buy a house?  A program like this may flop out of the gate, or it could thrive.  The more pilot projects there are, the better.

Working Together to Find an Answer

We can all agree that affordable housing is a good thing.  You won't meet many Americans who are against safe and modest living conditions for everyone.  The problem is that both of the major parties in this country disagree on how.  As is normally the case when issues like these arise, party leaders from both sides of the aisle will need to make some concessions, give up some ground, and push through their pride to work together on a solution that's practical for the American people.

In the divisive political arena we're currently operating in, this frankly doesn't look likely.  But all it takes is setting egos aside, and progress can be made.

The real estate market has been booming for the last few years.  While this is good news for some – particularly wealthy real estate investors and homeowners with stable income-earning opportunities – it's made it even more challenging for impoverished and low-income families to find housing.  The real estate boom has essentially poured gasoline onto what was already a glaring problem.  with the affordable housing crisis getting worse, millions are wondering if there are any viable solutions around the corner.

Understanding the Problem

The National Low Income Housing Coalition publishes regular reports on the shortage of affordable housing and how it's impacting renters and prospective homeowners.  In recent years, the data have been discouraging.

As one report reveals, "[t]he U.S. has a shortage of 7.2 million rental homes affordable and available to extremely low-income renters, whose income is at or below the poverty guideline or 30% of their area median income.  Only 35 affordable and available rental homes exist for every 100 extremely low-income renter households."

Research from other independent groups and coalitions reveals similar results.  According to the Monroe Group:

  • There isn't a single county in the United States that can fill 100 percent of its low-income population's needs for safe and affordable housing.
  • More than 11 million Americans pay more than half of their salaries on rent.  The number of renters in this category has ballooned by 30 percent over the past five years.
  • To afford a basic two-bedroom apartment in the U.S., renters need to earn an average of $20.30 per hour.  Considering that minimum wage is just $7.25 per hour, a renter would need to work 112 hours per week to afford a modest two-bedroom rental.

Clearly, something is broken.  Though promises have been made on both sides of the party line, little has been done to solve the issue.  Whichever party is out of office likes to pin the blame on the party that's in office.  The roles then reverse when a new party seizes control.

Recently, President Donald Trump has caught a lot of flak for his decision to cut funding to some of the affordable housing programs.  While there's no doubt he's slashed some of the resources, most conservatives agree with the decision.  President Trump isn't anti-affordable housing – he's merely against publicly funded affordable housing (at least to the degree that those on the left prefer).

Four Possible Solutions

Trying to publicly fund affordable housing solutions through taxpayer money hasn't worked over the past couple of decades.  It's time for a fresh approach, and the current administration has an opportunity to encourage, facilitate, and even mandate new strategies.  Having said that, let's explore some possible solutions:

  1. Encourage Investments in Old Buildings

Everyone wants to talk about lowering rents on existing structures or building new affordable housing.  But why are these the only options?  Take a look around any city or metro area, and there are boarded up buildings, vacant apartments, or old government buildings that are no longer in use.  Finding ways to use these spaces and up-fit them into affordable housing units is far more cost-effective.

Some municipalities around the country are already looking into this – including a few in the D.C. area.

"[One] report suggests more re-imagining of library spaces, fire stations and schools," The Washington Post notes.  "In Alexandria, 64 units were created at an old fire station near Potomac Yard; Arlington is considering land near the East Falls Church Metro station."

These revitalization projects will have to make sense to proceed.  A half-hearted approach could actually do more harm than good.  But in some cities, successful projects like these may alleviate a lot of the pressure.

  1. Normalize Tiny Living Solutions

There seems to be an expectation that everyone deserves a spacious place to live.  But in cities that are becoming overcrowded, there simply isn't enough space to provide large apartments and homes for everyone.  Normalizing tiny living solutions could go a long way toward maximizing space and creating cost-effective housing.

When presented with the option, most renters would prefer a well designed tiny house with premium features to a cheaply built home with some extra square footage.  Local housing boards can encourage tiny living development by funding builders and relaxing zoning restrictions.

  1. Create Tax Incentives for Employers

Employers can often help employees out with housing.  Mandating assistance will never work, but incentives could.

State governments would do well to consider incentive programs where employers are rewarded with tax benefits and credits for covering a portion of their employees' rents or mortgages.  This would alleviate some of the financial burden from corporations, while giving employees a chance to live in affordable housing that's within a reasonable proximity to their place of work.

  1. Use Funds Responsibly

Public housing handouts do little to encourage individuals to escape their situation and move toward home ownership.  In fact, many low-income individuals work hard to stay within a certain income bracket so they can continue to receive free housing.  In this sense, these programs discourage people from moving up.

The solution could be to use public housing funds more strategically so that low-income families receive the help they need while simultaneously being prepared for financial independence down the road.  Some cities, like Cleveland, have already begun to do this.

"A new six-unit housing development called the Glencove (the building once housed a tavern by the same name) offers artist housing with a slight twist," Patrick Sisson writes for Curbed.  "Residents earn bonus equity every month they pay rent, up to $10,000 over the course of 10 years, which can then be used to pay for a down payment on a studio or home.  It's a pilot artist-ownership model that pushes renters toward more permanent housing."

Similar programs could be successful in other cities.  Incentives like these encourage renters to look beyond today and plan for the future (while getting some much needed assistance).

There's plenty of room for like-minded programs to be reviewed.  For example, what would it look like if subsidized housing programs set aside funds each month in designated saving accounts that renters couldn't touch until they were ready to buy a house?  A program like this may flop out of the gate, or it could thrive.  The more pilot projects there are, the better.

Working Together to Find an Answer

We can all agree that affordable housing is a good thing.  You won't meet many Americans who are against safe and modest living conditions for everyone.  The problem is that both of the major parties in this country disagree on how.  As is normally the case when issues like these arise, party leaders from both sides of the aisle will need to make some concessions, give up some ground, and push through their pride to work together on a solution that's practical for the American people.

In the divisive political arena we're currently operating in, this frankly doesn't look likely.  But all it takes is setting egos aside, and progress can be made.