Housing affordability remains a huge challenge in many local housing markets across the country. Nationally, home prices remain affordable by historic standards—with just 22 percent of median income needed to pay the median monthly mortgage—but the lower end of the market suffers from high prices brought on by limited supply.
Home prices in the lowest 20 percent of the market increased 94.3 percent from 2001 through the first half of 2019, compared with just 62.6 percent in the top 20 percent of the market. At the same time, a renter working 40 hours a week and earning the minimum wage cannot afford a two-bedroom apartment in any US county.
The lack of affordable housing significantly affects families and communities. Families that pay too much for housing have fewer resources to pay for food, education, health care, and transportation and subsequently have worse outcomes in these areas. Housing affordability is also important to sustainable economic growth, as housing costs are a significant factor in employee retention and productivity.
And although the affordable housing crisis affects communities across the US, many of the root causes and solutions are tied to local action. City zoning and land-use policies, the presence of anchor institutions, regional income levels, and inequalities all play a role.
The Urban Institute and Fannie Mae recently hosted Unlocking the Market: Big Ideas for Local Housing Challenges, a half-day gathering of business and government leaders and housing advocates who shared lessons learned about developing housing affordability solutions in various cities. Three overarching tips emerged from the stories told by the 20 speakers:
Work to include the views of the most affected residents
Low-income residents, who are generally the most affected by a lack of affordable housing, often don’t have the political voice to influence housing outcomes in their communities. For example, a study by Boston University’s Initiative on Cities found that people who oppose new multifamily housing developments are more likely to speak at public meetings than those who support them. In Boston, those who spoke more were also more likely to be white homeowners.
Janne Flisrand, cofounder of Neighbors for More Neighbors in Minneapolis, described her partnership with area residents, elected officials, and city staff in support of the Minneapolis 2040 Plan, which included several policies to increase development of more affordable housing over the next 20 years. City staff focused on community engagement efforts—particularly with groups typically left out of the housing conversation—such as attending neighborhood and community events and asking open questions of community members about how they expect their housing needs to change over time.
“Historically, people of color and indigenous communities, renters, and people from low-income backgrounds have been underrepresented in civic processes,” said Flisrand, citing the Minneapolis 2040 website. “[City staff and planners] designed a civic process explicitly to counteract that history.” Making the city planning process more inclusive led to the implementation of a plan that would explicitly address Minneapolis’s affordable housing crisis in the coming years.
Identify and address lingering structural inequalities
One of the event’s most prominent themes was the importance of historical awareness and understanding the impact of past inequalities on today’s crisis. Several speakers noted the links between racial inequality and the affordable housing crisis; the legacies of redlining and housing discrimination have left Black and Hispanic Americans more likely to be low-income renters and less likely to be homeowners than white Americans.
“You cannot ignore that there are certain structures built on race that we are trying to dismantle, and that can continue to exacerbate [the affordable housing crisis] if we’re not paying attention,” noted Alicia Wilson, vice president for economic development at Johns Hopkins University. Hopkins has coinvested in housing affordability and homeownership in neighborhoods near the university—particularly those with high vacancy rates and high code enforcement.
Focus on developing housing near jobs and other critical services
Several panelists discussed the importance of the location of new housing. Prudential Financial’s Impact and Responsible Investment Group invested more than $400 million over five years in a range of transformative projects that increased downtown vitality, with more than 1,200 mixed market rate and affordable residential units, 358 hotel rooms and 500,000 square feet of commercial space and retail amenities and preserved more than 1000 units of affordable housing across the city.
“We don’t want to have housing for the sake of housing,” explained Daryl Shore, Prudential’s director of inclusive communities. “We want to make sure that this housing is situated near opportunity, transportation, health care, jobs, child care, because we know housing for the sake of housing doesn’t really work.”
Housing market challenges are unique and localized. These tips can be applied by local leaders: intentionally including the voices of all residents, acknowledging and addressing historic inequalities, and encouraging more affordable housing near jobs, transit, and services. Including these ideas in planning can help local housing markets meet the growing needs of families.