Is Affordable Housing The Country's Number One Domestic Problem?

Trump Sees It As An Opportunity To Use Racism To Scare Suburbanites

Asked by Ali Velshi what stuck out the most about Kamala’s announced policy initiatives at the convention, Bernie immediately went to the affordable housing shortage. “I think she’s absolutely right to emphasize the housing crisis in America. And frankly, we in Congress have been behind the curve on this situation… People cannot afford housing. We’ve got 650,000 people who are homeless. We’ve got large corporations buying up housing, jacking up rent. So the idea of constructing 3 million units in the next 4 years of affordable housing, lower income housing, I hope senior housing is absolutely a step in the right direction.” 

Yes… a step in the right direction. Biden had asked for 2 million new units— and that was a non-starter. Zillow reports the country is short by over 4.5 million right now. “At its core, the housing market is driven by supply and demand. When the number of people who want a home increases faster than the number of homes available, prices go up. This balance reached a tipping point when the Great Recession ushered in a decade of underbuilding and millennials— the biggest generation in U.S. history— reaching the prime age for first-time home buying. The result has been worsening affordability, now exacerbated by stubbornly high mortgage rates. ‘The simple fact is there are not enough homes in this country, and that's pushing homeownership out of reach for too many families,’ said Orphe Divounguy, senior economist at Zillow. ‘The affordability crisis extends to renters as well, with nearly half of renter households being cost burdened. Filling the housing shortage is the long-term answer to making housing more affordable. We are in a big hole, and it is going to take more than the status quo to dig ourselves out of it.’”

The pandemic-era housing frenzy sparked a construction boom, but thus far, that boom has fallen short. In 2022, 1.4 million homes were built— at the time, the best year for home construction since the early stages of the Great Recession. However, the number of U.S. families increased by 1.8 million that year, meaning the country did not even build enough to make a place for the new families, let alone begin chipping away at the deficit that has hampered housing affordability for more than a decade.

One indicator of housing affordability is how strict a region's land-use rules are, new Zillow research shows. Those who live in highly regulated housing markets, as defined by the Wharton Residential Land Use Regulatory Index, are less likely to be able to afford the mortgage payment on a typical home in their metro, even in markets with higher-than-average incomes. This is because housing supply persistently falls short.

…Reforming zoning rules to allow for more density is key for more homes to be built. Experts overwhelmingly agree that relaxing zoning laws is one of the best ways to improve affordability, and these types of measures have broad support among homeowners and renters. Even adding a modest amount of density in the country's biggest markets could create millions of new homes.

More steps in the right direction include eliminating or reducing parking requirements and minimizing delays in approval of building permits.

Yesterday, Jordan Wolman and Melanie Mason tackled the politics of the housing crisis, noting that Trump and the Republicans, who have no solutions to anything, are trying to use housing as a wedge issue against Democrats. “Democrats are trying to turn a political vulnerability, housing affordability, into a winning issue for November. The strategy carries significant risk: It’s likely to spark a host of fights across blue cities and states. Top party leaders are leaning into what’s long been a perilous issue for the Democratic Party in response to voter outrage over the crunch of housing supply and the rising costs of homes and rents. At the Democratic convention, leaders including Kamala Harris and Barack Obama built on existing momentum in both red and blue states— including Harris’ home state of California— and called for an overhaul of local zoning laws that act as barriers to new and cheaper housing. But the federal government has limited influence on these rules.”

Jackie Kellogg, a top candidate for the Florida legislature— and the most likely to win a red seat in the whole state— told us that “housing costs are an issue because the salaries of the working class are not in line with the cost of housing. Rents and property insurance rates are not in proportion to salaries. With other costs on the rise, food, gas, auto insurance, access to health care, mental healthcare and poor transportation options, it is unbearable. In addition, senior citizens living in condos are now faced with a sudden increase in assessment fees due to concerns about the integrity of the buildings since the collapse of the Champlain tower in Surfside. The Florida GOP always finds a way to capitalize on tragedy. I believe it is less costly and more humane to keep people in their homes, either through guaranteed income or government funding like the Sadowsky Trust Fund established in 1992 which somehow has been raided by the Florida GOP. Salaries need to go up and the Florida GOP needs to allow federal money in to assist in the housing crisis.” 

Ben Braver, like Kellogg, a candidate for the Florida legislature told us he’s found that “Affordable housing is a loaded term and signals ugly commie blocks to people. And building new homes isn’t always the answer because for every unhoused person in America there are 33 either vacant homes or homes that need to be refurbished. Monopolies have been stealing our homes, turning the best way to build wealth into a drain on working people’s wallets. And Rent Inflation has risen faster than overall inflation due to companies like Real Page allowing corporate landlords to collude openly. They’ve become cartels. We need to invest in Community Land Trusts to keep our land in our hands, enforce anti-trust legislation, and regulate the monopolized insurance industry.”

Wolman and Mason noted that if the pleas expressed during the convention work, “it would send cheering mayors, city councilmembers and party chairs back to their hometowns to pick battles with Democrat-run planning boards and Legislatures in major metro areas and small towns alike in an effort to fulfill Harris’ pledge to build three million new homes.”

“It was a call to action, but also calling out our local elected officials that are the ones who have the authority to make these changes and are in the trenches in their local communities,” said Washington Democratic state Rep. Jessica Bateman, who has authored new housing reform laws in Olympia and is running for state Senate on a pro-housing platform. “The reason why it’s being discussed by our national leaders in prime time television is because it’s impacting our communities in every area across the country.”

In some ways, it’s a political risk for Democrats to confront housing. The issue has proven to be a liability for them in some of the cities they control, fueled by notoriously intense, ‘Not in my backyard’ or NIMBY fights that have already gifted a potent line of attack to Republicans as former President Donald Trump seeks to exploit Democrats’ urban housing failures and raise alarm about what they could mean for suburbia.

But it’s also a sign of how hard it’s become for Democrats to ignore the growing chorus of voters who can’t find affordable housing or are priced out of buying homes. Now they want to flip the script and own an issue impacting large swaths of Americans as it becomes a centerpiece of Harris’ campaign.

…The specific push for zoning and land use reform highlighted by Obama’s DNC call to “clear away some of the outdated laws and regulations that make it harder to build homes” has been bubbling up from the state level for years.

While Señor T occupied the White House— and under Republican control in various states— there were attempts to address housing issues that focused almost entirely on deregulation and had virtually nothing to do with affordability. Trump sought to roll back Obama-era regulations like the Affirmatively Furthering Fair Housing rule, which was designed to combat segregation in housing. Trump argued that such regulations were burdensome and interfered with local control, but this rollback only exacerbated issues of housing inequality. He also got behind the creation of Opportunity Zones through the 2017 Tax Cuts and Jobs Act, meant to spur investment in economically distressed areas, but the policy primarily benefited wealthy investors rather than significantly improving housing affordability or economic conditions for residents in these areas. In states with complete GOP control the approach always revolves round reducing regulations, making it easier for developers to build market-rate housing rather than targeting affordable housing specifically. In Texas the push for looser zoning regulations and fewer restrictions on land use has resulted in higher levels of homebuilding— a good thing— however, almost all of this new housing is not affordable for low- or even middle-income residents. The story in Florida has been pretty much the same: deregulation and development incentives, coupled with a failure to address the needs of the state’s growing low-income population. In state after state, Republican policies fail to address the root causes of the housing crisis— the affordability aspect. By focusing on deregulation and market-based solutions, their policies strictly favor developers and higher-income individuals, leaving lower-income residents up shit’s creek without a paddle.

There are some localities that have taken innovative and  somewhat successful approaches. In 2018, Minneapolis became the first major U.S. city to eliminate single-family zoning citywide, allowing for the construction of duplexes and triplexes in all neighborhoods. This move was part of the Minneapolis 2040 plan aimed at increasing housing density and affordability. Early indications suggest that this zoning reform has helped increase the availability of affordable housing units. Portland has been a leader in promoting Accessory Dwelling Units (ADUs)— smaller, secondary homes built on the same lot as a primary residence. The city waived development fees for ADUs and made the permitting process easier, leading to a significant increase in construction, creating more affordable housing options without changing the character of neighborhoods. Meanwhile, Austin has implemented density bonuses for developers who include affordable units in their projects, while establishing a Housing Trust Fund to finance affordable housing projects. The cit has also made significant investments in public land for housing developments, which have helped create a substantial number of affordable housing units.

San Diego has embraced modular housing as a quick, relatively cost-effective solution to their homeless problem, building modular, prefabricated units, assembled on-site. And Boston has an Inclusionary Development Policy that requires developers of large projects to set aside a certain percentage of units as affordable or contribute to an affordable housing fund. The city also uses public land for affordable housing projects and offers density bonuses to developers who include more affordable units. These policies have contributed to a steady increase in the number of affordable housing units in the city. (It’s a very different approach to Ron DeSantis’ decision to use public land— state parks— for golf courses and pickleball courts.)

Wolman and Mason reported that “California and San Francisco in particular have become the poster child for unaffordability, with expensive housing fueling waves of homelessness that burden city services and repel people and businesses. State lawmakers have responded, passing laws that streamline permits for affordable housing and banning single-unit zoning, an effort seen as critical to paving the way for more building…Red and blue states alike have pursued similar paths as lawmakers in state capitals have taken zoning power away from localities.”

Washington state and Vermont have also effectively banned single-family zoning. New York Gov. Kathy Hochul and Colorado Gov. Jared Polis have made housing reform top priorities. They both found out the hard way how politically combustible the issue is even within their party: Hochul pursued a modest approach to housing this year after facing blowback to a more ambitious proposal that failed in Albany last year, while Polis also had his original measures rejected by fellow Democrats in Denver before reaching compromise this year.

…Trump said earlier this year he will stop Democrats’ plans to “abolish the suburbs” and in 2020 laid out a vision for “preserving local decision-making” on housing.

“The thing is, if you took Trump’s name off of that statement and put it in Takoma Park or North Berkeley, you could almost hear a ‘progressive’ Democrat city council member saying the same thing,” said Matthew Lewis, a spokesperson for California YIMBY. “The crux of why it’s so important for Democrats to hear this housing message is that when they go home to their cities, most U.S. cities are governed by Democrats, most U.S. cities have similar housing shortages and it’s the Democrats who actually are sitting in the seats to solve the problem.”

One thing the two parties seem to both embrace to some degree is the idea of selling off excess federal land for affordable housing development.

But even if it happens, it’s unlikely to make a significant dent in the overall scope of the problem given that much of it is far from metro areas and not suitable for development.

Harris has focused on housing policies that could be tough sells in Congress, including up to $25,000 in federal down payment assistance for first-time homebuyers, a $40 billion “innovation fund” to encourage localities to build more housing and cracking down on rent hikes. The Committee for a Responsible Federal Budget, a nonpartisan nonprofit, estimated Harris’ economic agenda would increase deficits by $1.7 trillion over a decade.

“We welcome Kamala Harris’ excitement about allowing more housing to be built and easing some of the onerous zoning requirements that have created an artificial scarcity of housing,” Polis, who signed a half-dozen housing reform laws this year, said last week. He added that he’d support some federal intervention in the form of attaching strings for localities to access housing vouchers and funding.

Much of it, though, comes down to state and local zoning and land-use regulations that can make it prohibitively expensive— and in some cities outright impossible— to build affordable units. Regulations from all levels of government typically account for 25 percent of the cost of building a new single-family home and about 30 percent of the cost of building a new apartment building, according to the National Association of Home Builders.

Economists and housing advocates are skeptical that a carrots-only approach will work: Many localities have traditionally resisted efforts to build new affordable housing within their borders, and mayors are often keen to keep the federal government off their backs.

But “the impediments are often political, not economic, and it’s hard to use economics to overcome something that’s economically nonsensical,” said Jim Parrott, a fellow at the Urban Institute and a former senior White House economic adviser in the Obama administration.

Even if the feds have a limited toolkit, Rosemarie Hepner, vice president at the Urban Land Institute’s Terwilliger Center for Housing, said the rhetoric from top Democrats offers local officials “political cover” to address the issue.

Ben Metcalf, managing director of the Terner Center for Housing Innovation at UC Berkeley, added that housing is currently a relatively “depolarized and bipartisan” issue in states that both sides agree is urgent, giving politicians “more room to run”— compared to immigration or trade, where “everything is more boxed in.”

For Democrats, it’s a test of whether they can overcome being their own worst enemy at times. Wealthy homeowners, some liberal, have historically acted as an immovable force to block zoning changes or affordable housing projects.

Now, pro-housing Democratic candidates “can go out and say, ‘I am with Barack Obama. I believe this is a problem. I support our presidential nominee when she says this is a problem.’ If you’re a mayoral candidate, are you suddenly not on the side of Barack Obama?” said Bobak Esfandiari, a YIMBY activist in San Francisco who was at the DNC. “It sets up a very healthy contrast.”

Sue Altman is New Jersey’s top candidate to help flip Congress. “Democrats,” she told us last night, “are making it clear that we are going to tackle the core issues of affordability facing districts like mine across the country. Here in NJ-7, working families are already overtaxed and overburdened. Our state has become incredibly expensive, and we need to make sure we're using all of the tools available to us to build an economy that allows the next generation of New Jersey families to thrive. That starts by restoring the SALT deduction, taking on corporations who jack up the cost of groceries and gas, investing in small business owners, and increasing the resources to first-time homeowners.”

A Florida congressional candidate, who preferred to stay anonymous, “told us that no one is bringing up housing when she’s out meeting people. “The great majority of people in Florida don’t believe that the government has anything to do with housing. I have done my best to raise awareness on this, because it’s just not true, but that’s the reality ‘on the ground.’ A true progressive response, as far as I’m concerned, is for the government to issue tenders to build housing, and then sell those units off as they are completed. If the Government makes money, so be it; if the Government loses money, so be it. That’s not on anyone else’s agenda, here. Regarding rent, the really overwhelming tax advantage of home ownership should be extended to renters. Most or all of rent should be deductible, up to a certain limit, because home interest and property taxes are deductible, up to a certain limit. It’s an offense against microeconomics to continue this discrepancy. Regarding home ownership costs, the Government essentially controls the entire market through Fannie Mae and the FHA. The key change would be to reduce interest rates, but aside from that, down payment requirements are too high.” 

And this isn’t just an urban problem. Jerrad Christian told us that in his largely rural, small town Ohio congressional district people re complaining about corporations buying up family homes. “They use ownership to raise regional rents and with interest rates so high, ownership becomes a distant dream.”