A Roadmap for Governments to Help Solve the Affordable Housing Crisis

A new report from the Lincoln Institute of Land Policy takes an in-depth look at the affordable housing crisis. Over the last several decades, American households have spent an increasing portion of their income on rent, and today more than half of renting households are rent burdened, meaning they pay more than 30% of their income on rent. Even worse, 26% of households are severely rent burdened, meaning they pay more than half of their income on rent. However, local governments can play a critical role in the availability of affordable housing, and the report makes recommendations on how local governments can create appropriate housing policy to combat these challenges.

The report outlines a nine-pronged approach for local governments to address affordable housing issues. It suggests governments start by articulating clear housing objectives to identify appropriate policies followed by engaging with local agencies to create the most comprehensive approach possible. These agencies include the local housing department, public housing agency, planning department, tax authority, zoning commission, economic development agency and buildings department.

After creating this roadmap and partnering with agencies, local governments can begin to target appropriate legislative responses. As such, the next recommended step is to create a balanced strategy by addressing competing interests in housing. Often housing policies cater to select groups, either by focusing only on the development of affordable housing or by reducing barriers to development. Instead policy should address both market needs. Next, the report suggests working with a diverse group of community stakeholders, specifically people of color, low-income populations, and marginalized groups. This will have a two-fold impact: it will create a stronger housing policy and it will expedite implementation. Once the overarching goals have been outlined, governments should develop measurable benchmarks and reporting guidelines to ensure accountability.

As local governments develop a housing strategy, it is important to include complementary policies, including non-housing policies. According to the Lincoln Institute, both housing and non-housing policies will be needed to thoroughly address affordable housing. This includes policy that impacts housing costs, public transit, education and sustainability.

As governments work toward implementation, the next steps to ensure a solid housing policy is to garner early and broad political support, because it will take a tremendous amount of political will to address housing challenges. The report recommends building coalitions across housing and non-housing groups. Governments should also plan for scale. In the past, cities have acted on an insufficient scale, which can ultimately exacerbate housing issues and cost municipalities more. Part of the strategy should include dedicating sufficient resources for a comprehensive strategy that increases affordable housing in the long term.

The final piece of advice: employ a regional approach. Housing strategy is often curated by city and county governments, but policy should also address broader regional needs. The report uses Chicago as an example. The market allocates shared resources throughout the region allowing municipalities to work together to expand the availability of affordable housing and encouraging communities to collaborate on infrastructure improvements.

Affordable housing was in crisis before the pandemic, but the economic distress from the last 12 months only exacerbated the challenges. As a result, several major players are entering the space to tackle affordable housing. In October, Morgan Stanley issued a $1 billion social bond that will be used to finance affordable housing projects, and Avanath Capital Management and MacFarlane Partners jointly filed paperwork with the SEC to create a new REIT to focus on affordable and workforce properties in opportunity zones.