Policy Approaches for Improving Housing Affordability and Availability
March 10, 2022
Roughly 36 percent of households in the U.S. rent their homes. Of them, nearly half are cost-burdened (spending more than 30 percent of their income on rent), and around a quarter are severely cost-burdened (spending more than half of their income on rent). The median home price in the U.S. has increased about 30 percent in the last decade, while incomes have increased only 11 percent. In just one year (2020 to 2021) the average home sale price rose nearly 16 percent, surpassing $400,000 for the first time and representing the sharpest increase in the last 20 years. Rental prices have also been increasing faster than wages, especially after the COVID-19 pandemic.
Families that need to allocate more household resources to rent or mortgage payments are often unable to meet other essential needs or invest in their health and wellbeing, making them more likely to put off necessary medical care. Homeowners behind on mortgage payments are more likely to lack sufficient food supplies and skip their prescribed medications. Cost-burdened households may also have no choice but to live in poor quality housing or may not be able to afford to make necessary repairs and improvements to their homes. Poor quality housing presents serious health hazards such as a lack of heat or air conditioning, exposure to lead and other toxins, increased risk of injury due to structural damage (e.g., broken stairs, windows, or floors), exposure to rodent- or insect-borne disease, and chronic stress.
Governments and non-profit organizations across the U.S. have employed numerous policies and programs to address housing unaffordability. The Network reviewed best practices and overall effectiveness of five of the most common approaches: rent price restrictions, public housing developments, homeownership assistance, community land trusts, and zoning reform.
Rent control freezes the price of rent between lease terms for continuous tenants and rent stabilization places limits on how much rent can increase between lease terms for continuous and non-continuous tenants. Rent price restrictions such as rent control and stabilization are generally disfavored among political leaders and economists because they have the effect of increasing prices of rentals not covered by the policy and decreasing housing stock. Today, many states have laws outlawing these kinds of rent price restrictions.
Public housing is government-owned locally controlled rental housing available to households with low incomes at a below-market price. In the U.S., public housing suffers from underfunding and stigma, while European public housing has been highly successful. To improve U.S. public housing, the federal government should take notes from European countries by investing in repairing and building new public housing stock, diversifying the location and form of housing stock, and expanding eligibility.
Homeownership assistance policies take a variety of forms across local, state, and federal government, but primarily provide households with government-backed mortgage loans, tax incentives, and/or down payment assistance. While tax incentives have shown little positive effect, lending and down payment assistance programs that offer homeownership counseling have been the most effective at increasing rates of homeownership and decreasing rates of mortgage default and foreclosure.
Community land trusts emerged in the U.S. in 1969 and have been gaining popularity worldwide since the 1990s, for good reason. Community land trusts are typically organized as nonprofits that work with state and local governments to create systems of permanently affordable housing that allow households with low incomes to become homeowners and build equity and generational wealth. Community land trusts require significant investment up front but become self-maintaining over time and are effective at providing affordable housing long-term.
Finally, reforming zoning codes to shift from exclusionary to inclusionary provisions is one of the most impactful actions a state or local government can take to make housing more affordable for their communities, and, once implemented, requires minimal government involvement. Zoning ordinances have been used in states and localities across the country to exclude low-income and people of color by only permitting more expensive forms of housing to be constructed – three quarters of all land in American cities is zoned only for single-family housing, and many areas have lot size minimums, setback requirements, prohibitions on accessory dwelling units, and similar restrictive policies. Reevaluating the intentions and scaling back some of these requirements would allow private housing developers to construct more affordable multifamily housing buildings and would increase the land available for public housing and other public investments aimed at providing affordable housing.
Intervention to improve affordability of housing is crucial to address the sharp rises in housing costs and comparably slower wage growth. Fortunately, government officials and nonprofit organizations have a variety of effective policies and programs to choose from to best serve their communities and effective action can be taken by any level of government or size of organization.
The Network for Public Health Law provides information and technical assistance on issues related to public health. The legal information and assistance provided in this document do not constitute legal advice or legal representation. For legal advice, readers should consult a lawyer in their state.
Support for the Network is provided by the Robert Wood Johnson Foundation (RWJF). The views expressed in this post do not represent the views of (and should not be attributed to) RWJF.