Urban Wire Creating a National Housing Strategy to Increase Affordability for Renters, Buyers, and Sellers
Wesley Jenkins
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The number of people experiencing homelessness has hit a record high, more than half of renters are cost-burdened (PDF), and mortgage interest rates are at their highest since 2000—housing in the United States has reached a crisis point. According to Lael Brainard, director of the White House National Economic Council, a decade of lagging residential construction, increased demand for housing, and a global pandemic inflating costs, has led to an acute shortage of affordable housing.

In last week’s State of the Union, President Biden implored Congress to address the high costs of housing and committed to using administrative action, with an emphasis on helping first-time homebuyers and driving down rents. And this week, the administration released its 2025 budget, which includes a request for $258 billion in federal funding to build or preserve 2 million units and to fund numerous other housing proposals. These proposals—while pending Congressional approval—demonstrate a newfound commitment from the Biden administration on housing affordability and a clear recognition of the problem at hand.

In a recent event at the Urban Institute, Brainard detailed the administration’s housing plans and—in conversation with Mary Cunningham, Urban’s senior vice president for research management and program development—discussed how its proposals could “meet the needs of renters and aspiring homeowners, unlock today’s housing market, and build housing to meet tomorrow’s needs.”

The director’s remarks—along with insights from other housing experts—emphasized the urgency for a national housing strategy that can create affordable homeownership opportunities, drive down rental costs, and promote equity for people who have long been locked out of equal housing opportunities across the entire housing continuum.

Creating affordable homeownership opportunities

Homeownership has long been a key to climbing the housing ladder in the United States, but in recent years, those keys, which have always been hard to come by for many people, have become even more difficult to obtain and more expensive to use. For people with lower incomes, less wealth, and less upward mobility, the current housing market is all but unattainable. Young people have lower homeownership rates than previous generations at the same age and are facing multiple barriers.

In recent months, mortgage interest rates have risen to their highest point since 2000, while the number of active listings on the market has fallen by more than half since 2016. Of the listings that are on the market, fewer than 15 percent are priced at $200,000 or less, whereas more than 40 percent were in 2016.


For Black and Latinx people, who’ve had limited opportunities to build intergenerational wealth because of systemic discrimination and structural racism built into the housing market, this decrease in affordability is an even larger barrier. “Communities of color are often more likely to experience homelessness, they are more likely to be renters, and they are less likely to be homeowners,” (PDF) said Michael Neal, a senior fellow in Urban’s Housing Finance Policy Center. “This suggests that public policy has to go beyond just bringing balance to the housing market; it also needs to root out instances of systemic racism to ensure that everyone is able to benefit.”

The administration’s proposals include policies—such as mortgage relief credits for both first-time homebuyers and sellers of starter homes and a first-generation down payment assistance program—to address these systemic inequalities and mounting affordability hurdles. The proposed budget also allocates $20 billion in housing innovation funding, which seeks to incentivize communities to meet their needs in the ways that work best given their local contexts.

“I think the package they put together to help increase affordability and homeownership makes sense as a structure,” Jim Parrott, a nonresident fellow in Urban’s Housing Finance Policy Center, said. “They really do take a swing at expanding inventory in the market, especially the bottom end of the market where the supply shortfall is the most extreme.”

Driving down rental housing costs

Rent has remained persistently high across the country even as the prices of other goods have decreased somewhat after spiking during the pandemic. As Brainard mentioned in her remarks, “Just 5 percent of all newly completed units in 2022 had asking rents that were affordable to a household with a median renter income.” With rents climbing, landlords have also introduced hidden fees, disguising the true cost of housing. Brainard spoke of one renter in South Carolina who rented a property listed at $1,100 a month but which truly cost $1,800 a month after all the fees were included.

Rapidly rising rents and a shortage of 7.3 million affordable and available homes for those with the lowest incomes have contributed to record highs in the number of people experiencing homelessness nationwide. As of January 2023, approximately 650,000 people were experiencing homelessness, and 8.5 million households were paying more than one-half of their income toward rent, living in severely inadequate conditions, or both. Currently, 54 percent of renters (PDF) pay more than 30 percent of their income toward housing nationwide, with those cost-burdened renters more likely to live in inadequate housing.

These burdens aren’t shared equally as well. Black people rent at a rate nearly double that of white people, and close to half of Latinx people in the US rent. According to Peggy Bailey, vice president for housing and income security at the Center on Budget and Policy Priorities: “If policies created the inequities that we have, then we have to have policies to reverse them. The only way to do that is to actually talk about Black people, Latinx people, Native Americans very specifically because it’s going to take very specific and targeted community investments to make those changes.”

This grim reality of the rental market represents the consequences of decades of disinvestment in affordable housing infrastructure and direct assistance. As a result, renters who have found an affordable unit are reluctant to leave, which is creating a bottleneck in the housing market, according to Laura Arce, senior vice president for economic initiatives at UnidosUS.

To drive down rental costs, Brainard, quoting President Biden, said that the administration plans to “build, build, build,” with the centerpiece of that plan an expansion of the low-income housing tax credit, which would produce or preserve 1.2 million affordable rental units. To make those new units affordable to people with the lowest incomes, the administration has proposed increasing funding for housing vouchers for renters with low incomes and young people aging out of foster care, as well as Homeless Assistance Grants for 25,000 new households.

“We have to lean in on the fact that nobody should be living on the street, that everyone should have an affordable place to live,” Bailey said. “We want to create a world where everyone has their basic needs met, and housing is one of those basic needs.”

Ensuring all aspects of the housing continuum work in tandem

With their increased focus on reducing housing costs, from rental prices to homeownership attainability, the administration has “thrown down the gauntlet and made housing affordability a priority,” according to Parrott. But there’s still more policymakers can do to better align housing strategies.

In the panel discussion of the administration’s proposals, Arce, Bailey, and Parrott offered additional strategies policymakers could pursue to address the housing affordability crisis:

  • creating a tax subsidy for builders of entry-level housing
  • offering 529-like down payment savings accounts, with a savings match for certain buyers
  • preserving affordable units and helping the people currently living in those deteriorating, including public housing
  • supporting nonprofit and community developers to meet local equity needs
  • pursuing modular building, which could close supply gaps more quickly
  • spurring development near transit to increase job access

Ultimately, the panelists stressed that policymakers must not treat each rung on the housing ladder as a separate problem. They asserted that through rental assistance and creating more affordable rental housing, policymakers can help address homelessness. By making homeownership more attainable, they can help free up space in rental market. Aligning policy proposals across the housing continuum can lead to consistent and sustainable progress.

“It is critical that we do not see the world as a scarce pie that we have to fight with each other to get resources,” Bailey said. “We live in the richest country in the world; we have to open up to an abundance mindset to truly solve the problems in the housing crisis.”


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Research Areas Housing
Tags Fair housing and housing discrimination Federal housing programs and policies Homeownership Housing affordability Housing and the economy Housing markets Housing vouchers and mobility Infrastructure Public and assisted housing Racial barriers to housing Racial homeownership gap Rental housing
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