Current estimates indicate that the United States faces a shortage of several million housing units, a result of decades of low construction levels that haven’t matched the nation’s population-growth rate. In part, this inadequate housing construction stems from exclusionary land-use policies enforced by some of the nation’s wealthiest cities and towns. These communities often dissuade or ban the development of affordable housing projects, such as those funded through the Low-Income Housing Tax Credit Program, within their boundaries, which creates higher rates of racial and class-based segregation.

In the government funding law for fiscal year 2023, Congress created a new $85 million program designed to be a “carrot” for localities, states, and metropolitan planning organizations (MPOs) to remove barriers to affordable housing. Administered by the US Department of Housing and Urban Development (HUD), this program aims in part to address exclusionary zoning by granting funds to applicants that demonstrate an effort to promote housing availability by identifying and removing barriers to affordable housing.

Though the program’s scope is limited, HUD officials can counteract inequitable housing conditions by supporting states, municipalities, and MPOs that are committed to reducing exclusion.

Subsidized housing units are disproportionately located in low-income communities and communities of color

Land-use planning and affordable housing decisions are generally made at the local level, by city and town governments. With most metropolitan areas fragmented into dozens or even hundreds of localities, considerable variation in housing choices and regulations can exist across metropolitan areas.

Take the New York City region. To understand the distribution of affordable housing units in large cities, I examined the distribution of population and federally subsidized affordable housing units in incorporated jurisdictions throughout the urban area. Among the more than 500,000 subsidized units in the area, about 80 percent are in New York City itself.

The remaining 100,000 units are in the region’s suburbs, and they aren’t evenly distributed. Nearly a quarter (22 percent) of the suburban population lives in the 153 suburban cities with median household incomes of more than $125,000, but these cities contain only 6.5 percent of suburban subsidized units. On the other hand, 27 percent of the suburban population resides in the 35 suburbs with median household incomes of less than $70,000—but these cities contain 52 percent of suburban subsidized housing.

Similarly, the 194 suburban cities with predominately white populations (more than 70 percent non-Hispanic white) house 23.4 percent of the suburban population but only have 6.5 percent of the suburban subsidized units. The 18 cities whose populations are less than 22 percent white have 47 percent of the suburban subsidized units.

On average, suburban jurisdictions with low resident incomes have almost nine times as many affordable units per capita as those with high resident incomes, and suburbs with a low share of white residents have almost six times as many affordable units per capita as those with a high share of white residents. In other words, inequitable distribution of affordable housing is a fact of life in the NYC region. Similar conditions are likely present in metropolitan areas nationwide.

One explanation for these conditions is that people with lower incomes, who, in the US, are more likely to be people of color, may also be more likely to live in subsidized housing. But communities with a higher white population share have systematically zoned to prevent the construction of those units, reinforcing already geographically inequitable housing access. These conditions can only be addressed by tackling exclusionary housing and land-use policies within these communities.

The limitations of HUD’s new program

Previous proposals discussed by Congress, such as the bipartisan 2021 YIMBY Act, would have required recipients of HUD's Community Development Block Grants to track the implementation of several policies that encouraged increasing housing production, such as developing higher-density zoning and reducing minimum lot size. That bill could have led to a more even distribution of affordable housing in regions like NYC, but the bill wasn’t passed.

This new funded program doesn’t go nearly as far. According to the legislative text, the HUD secretary will prioritize funds for applicants that show progress toward increasing affordable housing production and that “demonstrate an acute demand for housing affordable to households with incomes below 100 percent of the area median income.”

If implemented appropriately, the program could encourage additional affordable housing production, but it doesn’t explicitly address the exclusionary zoning policies common to many suburban localities nationwide. Notably, communities with the most exclusionary policies will likely not apply for the program, as many are already well off and don’t need additional federal funds. Many of these communities also have elected officials who are ideologically committed to preventing the construction of new housing—particularly affordable housing. As such, the program may have little impact—or even worse, continue to concentrate affordable housing production in jurisdictions that are already more likely to have it.

And though an $85 million program is a start, it’s likely to have only minor influence given its small size. For comparison, in fiscal year 2022 (PDF), HUD spent almost $5 billion on Community Development Block Grants and tens of billions of dollars directly on affordable housing subsidies.

Orienting HUD’s new program to counter exclusionary land-use policies

Despite its limitations, the new HUD program could help counter exclusionary land-use policies. There are several approaches HUD could take in distributing funds:

• Perhaps most promisingly, HUD could support states that target affordable housing subsidies to projects in localities with a low percentage of subsidized housing or that have resisted those units’ construction in the past. These states could orient their Low-Income Housing Tax Credit distribution to projects in exclusionary communities, or they could implement laws mandating minimal housing production by locality.
• HUD could support MPOs that develop “fair share” policies for distributing federal transportation dollars, which are generally under their purview. These organizations could create regional transportation plans that only fund projects if they’re in localities that have agreed to build or at a minimum zone for a reasonable number of affordable housing units.
• HUD could support pro-affordable-housing localities that agree to reform their zoning rules specifically within neighborhoods with exclusionary zoning. This strategy wouldn’t necessarily produce more equitable regional distribution of affordable housing, but it would improve the local distributional equity of such units. To avoid this contradiction, HUD could specifically support towns and cities with few current subsidized units but that are interested in planning for better affordable housing access.

Each of these options could each encourage movement toward more inclusive metropolitan areas with widespread access to affordable housing.