Housing Affordability Requires
Community Resolve

Last Updated: June 20, 2024

We chose the image of housing affordability below to emphasize that very location-specific solutions to this persistent community development issue are possible. This is a Make a Difference Foundation house in the lower 9th ward of post-Katrina New Orleans. The challenge is to fit your climate, environment, and vernacular architecture into homes that can be available at modest cost, when compared to wages and earnings.

new reasonable cost home in post-Katrina New Orleans

Housing affordability consists of a good balance between the cost of housing and the incomes of the people who live in an area.

Unfortunately, this concept does not have a good reputation in many communities.  The term "low-income housing" is used as a pejorative, and that is why you may experience the use of synonyms or similar concepts, such as workforce housing and now the newer term attainable housing. Even in high-income cities with expensive housing markets, the lower cost housing often comes with a stigma. Try with all your might to replace condescending attitudes with compassion.

Seemingly no neighborhood wants to accept a large low-income development, and unfortunately many jurisdictions do not even want to allow housing types that their own teachers and police can purchase or rent.

Often higher-income or more exclusive communities must resort to a form of incentive or regulation known as inclusionary zoning, which may provide bonus quantities of development in return for providing housing affordability for needed workers in a community, or even require inclusion of more affordable units when market-rate housing is developed. We are big fans of inclusionary zoning, both in terms of helping to provide more housing for lower income and young residents and as a major part of the strategy to bring greater racial equity into the housing market. 

When it comes to very low income people, the tree-lined street communities get absolutely crazy at the thought of having them live nearby. Common fears are that low-income residents bring crime, boorishness, lack of upkeep, clunker cars, and their low-income friends to the neighborhood. There is a widespread notion that housing affordability eventually leads to  a slum, and the neighborhood that will look even worse after a few years.

Regardless of how they frame it, people fear that attention to housing affordability might have a negative effect on their own property values or the social stability of the neighborhood. Our answer to that is short but important: If you mix incomes rather than concentrate all of the lower priced housing units in one place, you will see little to no impact on real estate values and social cohesiveness.

We are not addressing housing for seniors specifically in this article. Even this type of housing faces many obstacles. For instance, see our answer to a compassionate site visitor's question about how to get more fixed income housing built.

Housing Affordability Is Relative

What is affordable to one household definitely isn't possible for another. What is reasonably adequate housing in one nation, culture, and climate may be considered woefully inadequate where the range of incomes is different and the weather unforgiving.

Let's deal with terminology a little more. Low-income housing is relatively easy to define in the U.S. because there are federal standards for eligibility. The Census Bureau defines the poverty line according to household size. So when we speak narrowly about low-income housing, that's easy to figure out, at least in the United States. If you need detailed definitions, see Shelterforce's excellent chart on affordable housing terms.

Commendably, now we've begun to think more broadly in terms of housing affordability by comparing housing cost to the ability of the people who live in that town or city to pay. Obviously affordable housing means something different in San Francisco and Akron. One tool that has good potential for addressing both of the extremes, namely a quite expensive market and a low-income neighborhood, is the community land trust. If you are concerned about an area on one end of the spectrum or the other, please check out our community land trust page.

Housing Costs Are Not Necessarily Correlated With Wages

From a community perspective,  it's possible to calculate whether there is a mismatch between the cost of housing and the wages paid by locally available jobs. Use Census Data, Bureau of Labor Statistics data, major employer survey information, and Realtor® and apartment advertising data to compare the two.

The tough part from a public policy perspective is planning an effective program after you know the answer to whether your town, small or medium-sized city, or your portion of the metropolitan area offers adequate housing affordability.

What to Do About Too Much Affordable Housing

A few of you might be saying, "Oh, we could only wish for the problem of not enough affordable housing. Rents here are low, and people can't pay much for owner-occupied housing." If there's a more than adequate supply of affordable housing to the extent that vacancy causes problems, you have three options:

  1. Increase your economic development activity, or work on an imaginative shrinking cities strategy, based on the fact that you can accommodate an additional workforce without waiting for housing affordability issues to be remedied; or
  2. You may need some serious neighborhood marketing or neighborhood revitalization. This could be especially true if you anticipate another wave of foreclosure.
  3. Maybe you as a community organization leader or as an elected official can encourage upgrading of some of the existing housing stock.

If people can afford more than they are paying, they probably would appreciate the opportunity for energy conservation improvements that would save them money in the long run but require a capital investment in the short run. Incentivizing such upgrades would be a wise public policy.

Perhaps other policy changes to keep housing in your area generally competitive with housing throughout the nation would be in order. Every city and town now needs an economic development strategy in case their principal employer(s) leave town.

Part of your economic development strategy should be an attractive range of housing options. So even if your current population is satisfied with under-spending on housing, the people you're trying to attract to provide jobs in your community may not be.

So if you're in an area where there are no privacy fences, paved driveways, street trees, garages, rental housing, one-floor housing appealing to the older adults you'll eventually have, or houses large enough for young families and their mounds of toys and stuff, you should probably explore incentives to inspire builders to move in those directions.

You want to encourage private owners to upgrade the steady rental properties they've taken for granted, but which aren't going to be in demand if you have to import a whole new crop of workers and executives to keep your economy humming.

When the Supply of Workforce Housing Is Too Low

But it's really the opposite problem that is more likely the case. You don't have enough housing affordability for the workforce you already have. Housing prices soared over the past 10-20 years, due in part to speculation, fueled by the trend of large corporations buying up single-family homes. The rapidly increasing home buyer demand for large square footages also means that developers and builders want to concentrate on that segment of the market and rather than investing in more modest products that meet the housing needs of .

Greed about particular amenities also has contributed to soaring costs. Stainless steel appliances really don't work any better than the ones you buy at the discount store. Sometimes they don't work as well, I can tell you.

But in some markets it was and is literally impossible to buy a modestly proportioned house that offers good design and good function but without extraneous goodies and an enormous private yard.

So what should you do if housing is a big issue for you? Here are the solutions.

1. Ask developers, real estate professionals, appraisers, and planners.

When in doubt in matters of community development, ask. Simply ask why the housing supply in the price range you need for workforce housing affordability is missing. Remember to ask about both rental and for sale homes.

If you've done your homework otherwise, and you have a housing inventory telling you approximately how many of each housing type is available in the community, ask the professionals and yourselves if there is an absolute housing shortage, or if there is only a shortage of affordable units, considering the incomes households are able to earn in your community.

Be alert for self-interest in the answers that these professionals give you, of course, but still, if you are appropriately skeptical, you can learn a lot from them.

2. Act boldly.

If you have both a shortage of affordable units and a shortage of total units, then your solution in some ways is simpler. If you're a part of a municipal government or a neighborhood association that regularly tries to influence the municipal government, just take a firm stand and require that new housing built be in the affordable price range.

Use whatever combination of pressure, regulations, requirements, and discretionary approvals you have at your disposal. It's likely that you'll hear from the development and real estate crowd that, well, there's simply more profit potential at less risk in higher priced homes.

If you work on a commission, would you prefer to have 3% on a $600,000 home, or 3% of a $175,000 sale price? Hmm, if it's almost the same amount of work, which one would you do?

If you're a developer--not the guy or gal that wields the hammer but the paperwork guy, the developer-- it might be not be much more work to develop 100 houses at $600,000 than to produce 100 houses at $175,000 each.

So we know why the real estate industry keeps overlooking housing affordability, although we can hope that the least principled actors in the mortgage industry, which kept financing houses people couldn't really afford, are disappearing.

Seek the moral high ground and be an activist about the need for housing affordability. If you have enough political clout, encourage your city to require it through enacting inclusionary zoning measures and identifying and remedying exclusionary zoning practices. This brings us to a third point.

3. Examine your zoning code and any other ordinances that govern how development occurs. In suburbs and small towns, you may want to change your ordinances to allow accessory dwelling units.  If you hear from real estate professionals that households do not necessarily need large lawns, consider making your minimum lot sizes smaller. Zone properties near fixed transit lines (light or heavy rail in contrast to bus routes) to allow for higher densities in those areas than in the surrounding neighborhood.  Allow duplexes and triplexes in zoning districts formerly devoted solely to single-family land use.

Insufficient Supply of Low-Income Housing

The other problem is lack of supply of housing for people who are at or near minimum wage, or not working at all for one reason or another. Others have experienced a procession of bad luck events and cannot afford to pay much at all.

Federal programs supposedly take care of that problem by providing either (a) housing vouchers (formerly known as Section 8) that can be used to rent private housing, (b) whole complexes specializing in Section 8, or (c) public housing per se, where a housing authority has developed and manages an entire multi-family site.  Only rarely are there American government grants for housing.

In many towns, cities, and rural areas, though, the supply of this government housing assistance is too low.

Sometimes that occurs because not enough landlords are willing to enroll in the Housing Choice voucher program. They may feel that the calculated "fair market rent" that the federal Department of Housing and Urban Development (HUD) allows for their metropolitan area is too low. Or landlords just think that the inspection process is too tough, and they'll never make any money. Or they philosophically don't want to deal with the government-assisted housing payment or with poor people.

A rule called Small Area Fair Market Rent is now required in some cities, and permitted on an opt-in basis in others, to allow those fair market rents to be calculated by zip code, theoretically allowing landlords more rent in higher-income, higher-opportunity neighborhoods.  Time will tell whether this approach, which we completely applaud in terms of anti-segregation effects, actually will increase or decrease the supply of lower income housing. New York University analysis shows that these impacts are likely to be mixed.

A worse motivation is that property owners think their neighbors will be outraged if they suspect that they have rented out their house as a low-income subsidized rental property.

Neighborhood and community leaders, I have two thoughts for you.

1. You really need to model and teach that a small amount of low-income housing can be acceptable in your community, and here I mean an immediate community.

My experience completely supports the notion that you need to limit the amount of low-income units in a particular community. But for upper middle class communities, you can accept a few low-income households in widely scattered areas with absolutely no adverse consequences. This is particularly true if you have an engaged landlord or property manager who will occasionally check the property. It's your social responsibility to do this.

2. Besides missing out on the neighborly thing to do, if moderate and high income communities refuse to accept any low-income housing, the natural consequence is that low-income housing will be huddled together.

Experience suggests that this is wrong, wrong, wrong, and it just perpetuates community poverty and a diminished central city. That doughnut hole in the middle of your town or city is happening because you won't do your fair share. And as a result of the hole, your metro area is not as efficient, effective, and attractive as it could be, and it repels people who otherwise might invest in your city.

Incentives for Providing Reasonably Priced Housing

Usually inclusionary zoning provisions aren't sufficient if you have much of an affordable housing gap. Probably you will need to give developers attractive incentives to build what you want and need. These systems can be incredibly complex or very simple.

We want to make the important point that when a community really decides to address housing cost, successful approaches are possible. The real problem often is lack of will. (Refer to this interesting article about the author's belief that promoting the idea of housing as a great investment is fundamentally at odds with keeping housing costs reasonable.)

Your main problem with incentive zoning, as it is called, is that neighbors often will oppose the increase in density that usually serves as the "incentive" for developers to do something you want. In this case, you want housing affordability.

You may need to have your planners, staff, or planning consultant give a presentation showing attractive high-density development. High-density development is also another very relative term. But ask an authority to push the envelope for your residents, and show extremely attractive housing at a higher density than they're used to.

And then play fair, municipal and regional officials, planning commissions, and housing authorities, and scatter the affordable housing throughout the new development. Certainly don't concentrate it on the edges, or the neighbors really won't trust you next time, but also don't concentrate it anywhere.

If you have a significant sized infill site, also consider zoning it for a new urbanist development, which makes a mix of incomes not only possible but attractive.

Architectural Answers to Affordable Housing: The "Big House" Approach

Architecture is the answer for many housing affordability problems. Our mass production of housing is one of the reasons it seems to many real estate and development professionals that housing affordability means an ugly product. If you look at European models, it's possible to mass-produce something that isn't ugly and has potential for the individual expressions that make a house a home.

Elsewhere we talk about the "big house" concept, where what appears to be one large house actually can be three or four apartments. Either doors are strategically and logically placed on each side of the building, or there is one central entrance hall, with private entrances to each unit from that hallway.

Or more practical for some of you, the "big house" could look just like the rest of the 4,000 square footers on the block, but really consist of two 2,000 square foot condo units. Yes, it takes an architect and a little imagination.

But most architects like challenges. Then your job as the community or neighborhood leader will be to go jawbone the banker so that this housing type can be financed. It's a public good, and your community needs housing affordability. You're not bringing in a bunch of welfare-dependent folks; you're allowing your policemen, firefighters, teachers, and retail clerks to live in your community.

Mixed-Income Housing Is Essential to Society

The last point is to be more explicit about why society needs mixed-income housing.

In Hills v. Gautreaux (425 U.S. 284), the U.S. Supreme Court in 1976 handed down a consent decree requiring certain Chicago public housing residents to be relocated into areas outside of concentrations of poverty.

As a result 7,500 African American families on welfare were dispersed throughout the Chicago region into suburban or urban locations, providing they had no serious criminal record and that they had maintained their public housing units to a reasonable level. The administrators were careful to send only a few families to each suburb.

At first social science researchers reported dramatically improved outcomes for households that moved to the suburbs.  They thought children did far better in school and were more likely to graduate, and that parents became more prosperous as well. These glowing research reports, later discredited on the grounds of poor methodology, inspired a national Moving To Opportunity program, which simply hasn't been pursued aggressively enough.

Even though some of this research has been discredited to some extent through additional research, the main body of work still stands up to scrutiny in our opinion.

Your community can handle a few low-income residents now, can't it? An information clearinghouse is the National Low Income Housing Coalition. You're strong; you can do it.

Certainly you can promote housing affordability to the degree that people who work in your city can afford to live there. Indeed you can require it through inclusion in your comprehensive plan and strict adherence to the plan. If your residents are more wealthy than your workforce, you can definitely afford an architect to prepare some concepts and renderings that will push developers in the right direction. There are many exciting, colorful, and beautiful prototypes in Europe and the rest of the world that don't cost a fortune. I think we can provide housing affordability, compared to wages, in every community in America.

Read More About Issues Related to Affordable Housing

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