What Happens Next With Affordable Housing?

The shortage of housing affordable for middle-and-lower income Americans has long been a simmering crisis across this country. Not even a year ago, for example, the Center for Public Policy at Virginia Commonwealth University, conducted a survey that revealed more than three of four Virginians perceived affordable housing as a problem in America. Nearly half said they thought it was a very serious problem.  

“For the last several years, demand for low-to-mid-priced homes has outpaced the number of homes that are available in (an affordable) price range,” reports Robin Young, senior researcher for Buildium, a RealPage Company that consists of a  network of online property management services.

In part, this reflects the failure of the housing market to recover since the Great Recession. A 2018 report for Freddie Mac, which purchases and provides mortgage loans, found that the demand for housing would outpace the availability of housing over the long term by 2.5 million units. This mismatch only serves to drive up prices, the report concluded.  

At the state and local level, policymakers have grappled with how to respond. Laws have been passed in states like Washington that required that cities and counties create policies to encourage the building of more units of affordable living space. A good plan, perhaps, but there’s a giant leap from plans to implementations.

Perhaps the most obvious step they’ve taken is to channel tax dollars into new affordable housing projects. That’s an estimable idea. Rhode Island began issuing  housing bonds in 2006, which have paid for the building of over 3,000 units. “As of 2020, all three bonds—totaling $125 million—have been committed,” reports Housing Works RI at Roger Williams University. “These investments are making a real impact in our communities by expanding housing opportunities for Rhode Islanders, while also creating good jobs and revitalizing our economy.”

But the next few years could be a new economic reality for cities, counties and states. As we confront the coronavirus recession, which many believe will not hit tax coffers most severely until 2021 and even 2022, it flies in the face of common sense to think that governments likely forced to cut basic services could end up putting affordable housing at the top of their list of potential expenditures.

This conundrum comes even as experts warn of a pandemic-induced eviction crisis that could start in the next several months, with some estimating as many as 30 to 40 million renters are at risk of being forced out of their homes. The affordable housing experts note that while this is most obviously harming tenants, “mom and pop” landlords are also at risk of mortgage foreclosure and bankruptcy.

The prospect of affordable housing development getting pushed off the table even as housing takes center stage has been unfolding in Atlanta. Back in 2017, all the candidates vying for the mayor's seat, including the eventual winner Keisha Lance Bottoms, named housing affordability as a significant issue.

At one point, Bottoms indicated that her goal was to bring some $1 billion into her city for that purpose. The pressure wasn’t because Atlanta was one of the most pained by a housing shortage, but because observers could see alarming trend lines. Recalls Atlanta Councilmember Matt Westmoreland, leaders looked at cities with the greatest shortages and said, “This is what Atlanta will look like, if we don’t take steps to do something.”

As time passed, this political emphasis morphed into a proposal to put out a $100 million bond issue for affordable housing. Soon thereafter, the mayor lifted the target to $200 million. And then came the plague. In late March, the city council's community development and finance committees moved the proposal to the full body. At its April 20 meeting, given the state of the economy, the council referred the proposal back to committee, where it's been sitting ever since.

Westmoreland hasn’t given up hope. He is investigating the feasibility of identifying creative revenue streams that would cover the debt service on a 20-year bond issue for the first four or five years until the city has moved through the worst of the economic downturn.

California has been similarly impacted. As a state that has been in most dire need of affordable housing, it was taking positive steps that have become very difficult under the constraints of reduced tax dollars. “Sales tax was one of California’s biggest sources of funding,” says Peter Lawrence director of public policy and government relations for Novogradac, a nationwide consulting firm. “But I haven’t gone shopping since March.”

Aside from money, California lawmakers have resisted other efforts to get at the supply issues in their constricted housing market. While Oregon and the city of Minneapolis both approved “upzoning” proposals last year to force cities or neighborhoods to allow denser building, the California legislature early this year killed its own version of this idea, the much-touted Senate Bill 50. That legislation would have overruled local zoning regulations that currently restrict apartment development near transit locations and more generally required communities to allow denser construction, like duplexes and fourplexes, in areas zoned only for single-family homes.      

The nitty-gritty of local zoning regs are a key problem in housing development, says Robin Young. “Regulations may require multiple parking spots for each new unit of housing or limit the height or size of new buildings to the point that building (affordable) apartments remains impossible.”

But California legislators could take up the issue this summer, with several other initiatives, including what some have dubbed a “lite” version of SB 50, still on the agenda. 

Absent easy solutions, this is an issue that strikes at a very human level going right to the heart of one of the three oft-cited basic needs for humanity: food, clothing and shelter.

“This impacts millions of families and children every year. People have to turn to other means, small loans, living in crowded spaces (a huge health problem in the day of coronavirus) and taking away money from food and medical care,” says Jaboa Lake, senior policy analyst on poverty for the Center for American Progress, a liberal think tank.