Despite housing being a fundamental requirement, many Americans find it increasingly hard to find affordable housing. Around half of the 43 million renter households in America spend more than 30% of their income on housing. Some in that category spend more than half of their income on it. The lack of affordable housing hurts communities in many ways.
Impact on the Community Due To Lack of Affordable Housing
When people spend more than the acceptable proportion of their incomes on rent, they experience greater stress on several fronts like food security, healthcare, transportation, social stability, and retirement. Additionally, the absence of affordable housing close to the workplaces leads to increase traffic that impacts the environment negatively, increases sprawl, and leads to a lack of diversity.
Reasons for Short Supply of Affordable Housing
The lack of an adequate supply of affordable housing is the main reason for the crisis. According to the National Low Income Housing Coalition, the shortfall in affordable housing units is 6.6 million units. Since the current supply is only around 110,000 units per year, it is clear that the demand cannot be ever met. One of the main reasons for the shortage of affordable housing is the local zoning and associate laws that make it difficult or impossible to achieve the density required to make affordable housing projects successful. According to Maxwell Drever, some of the resistance is deliberate. There is, however, a ‘Not in My Backyard’ attitude at play. Another reason for affordable housing units not being built in large enough numbers is the lack of financial support to make the projects affordable.
Demand for Affordable Housing
One of the main reasons for millions of renters in America to be cost-burdened is the rapid shrinking of the middle class and the redistribution of income and wealth in the last four decades. The share of wealth enjoyed by middle and lower-income households is dropping. The redistribution of income has reduced the number of households capable of affording market-rate rents and increased demand for affordable housing.
Local Policy Changes Required
One of the biggest hindrances to the growth in the availability of affordable housing in addition to tax policies is the land-use regulations at the local level. According to Maxwell Drever, while the allocation of substantial resources in the 2022 budget by the Biden administration is welcome for increasing the supply of affordable housing, it also needs to address federal tax policies responsible for income and wealth inequality. The federal government needs to tackle local opposition to affordable housing by helping reform zoning laws. Some of it will be achieved by encouraging municipalities to change but the narrative is not likely to change significantly unless the government threatens to withhold funding to local bodies resisting the development of affordable housing.
The supply of affordable housing needs to increase, however, the government must also undertake systemic reforms for more equitable distribution of wealth and reduce the resistance to change by municipalities, and encourage the development of high-density affordable housing projects.