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Homeownership is increasingly out of reach for many Americans. Among the solutions include policies to reduce building costs, provide incentives and encourage flexibility. (Michelle Kondrich/for The Washington Post)

The nation is in the grip of an affordable housing crisis.

A severe shortage of homes for working-class and low-income families is pushing up house prices and rents across the country, putting homeownership increasingly out of reach for many Americans and making rents so high that it is all but impossible for renters to save. With the presidential election fast-approaching, the candidates should explain what they plan to do about it.

Half of families who rent and nearly one-fourth of home owners pay more than 30 percent of their monthly income toward their housing costs, a level widely considered unsustainable.

After purchasing essentials, including food, clothing and utilities, the families have little left to cover the cost of health care, bridge the gap during a change in jobs or bear an unforeseen bill of any amount. And forget about saving for retirement or a child's education.

Fueling the rapid rise in rent and house prices is a severe lack of housing supply.

Nationwide, the percent of houses that are vacant has fallen to a more than 35-year low, translating into a shortfall of an estimated 1.6 million new houses.

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This gap is increasing by about 300,000 units each year, as builders are putting up close to 1.4 million new dwellings yearly, including single-family houses, apartments and manufactured housing. But the yearly demand for new housing, largely from new households and dwellings needed to replace those lost in natural disasters and to old age, is consistently near 1.7 million units.

The entirety of this shortfall is for low- and middle-priced housing. The cost of constructing houses has risen significantly since the financial crisis and builders have struggled to make the economics work to construct housing that most Americans can afford.

Soaring construction costs have been driven in part by a rise in local government fees and stiffer local zoning restrictions. During the real estate bust a decade ago, real estate prices and property tax revenues evaporated, forcing many local governments to jack up permitting fees to make up the difference.

Add to that often-tight local constraints on where and what one can build, and many of the communities that most desperately need affordable housing have rules in place making that housing almost impossible to provide.

The Trump administration's immigration policies aren't helping, as builders can't find the immigrant workers they need, driving up labor costs in the construction trades, particularly in the South and West, where demand for affordable houses is especially strong. Labor shortages in the transportation, distribution and manufacturing industries are also making home building more costly. And the cost of home building materials has risen sharply, driven in significant part by the trade war and higher tariffs on imported steel, aluminum and other building materials.

To cover these costs, builders have been focused on putting up houses in the top end of the market where they can still make a profit. The country now has a glut of luxury apartments, high-end condos and large residences, and a dearth of workforce and affordable housing.

As a result, in recent years prices for the lowest-priced houses have grown consistently twice as fast as prices for the highest-priced houses and now exceed what many families of modest means can pay.

This wouldn't be such a problem if wages kept up. But they haven't. Recent census data show that while the median cost of rent and utilities is up 13 percent over the past nearly 20 years, median income is up less than 1 percent (both inflation-adjusted).

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The widening gap between the growth of wages and the cost of housing has put homeownership out of reach for more and more families, particularly families of color. The homeownership rate for African Americans has fallen to a half-century low.

This in turn is exacerbating the growing wealth gap. In generations past, the primary way lower- and middle-income households were able to build wealth was by owning a home.

More than investing in the stock market, more even than investing in their 401(k) and other retirement accounts, the middle class built wealth through the simple act of paying their monthly mortgage. But with fewer families able to buy a house, and more renters spending so much of their income just to keep a roof over their heads, housing is increasingly more of a drain than a source of wealth building.

The affordability crisis is also undermining labor mobility, another pillar of the American economy. Unlike in much of the rest of the world, Americans have historically been willing and able to move where there is economic opportunity. In today's economy, the best job opportunities are often in the nation's big urban areas, but this is also where housing is least affordable.

Many are thus faced with the Hobson's choice of long commutes, unaffordable housing or forgoing good jobs altogether. Paralyzed by this, Americans aren't moving as much, and our economy is diminished as a result.

And then it isn't hard to connect the dots between the affordability crisis and the mounting problem of homelessness. Homelessness is a complex problem with many causes, but it isn't surprising that the big cities in California and the Northeast have among the least-affordable housing markets and the largest number of homeless.

What can be done

An increasing number of communities, including ones in California, Oregon and New York, are responding to the affordability crisis by imposing rent controls. At best this is a short-term financial salve for struggling renters. At worst it may exacerbate the problem, by limiting the returns to builders and their incentive to construct more dwellings.

What is needed instead are policies that reduce the cost of building houses more Americans can afford. Most obvious is beefing up the tried-and-true programs dedicated to reducing the cost of development, including the Low-Income Housing Tax Credit and the New Market Tax Credit. These tax breaks have proven effective in addressing precisely the supply problem at issue. But instead of expanding them, last year's tax cut reduced their value to developers.

More Zandi: How the Trump administration can continue progress in U.S. housing

The new Opportunity Zone tax credit, which provides tax incentives for investments in distressed neighborhoods, could also have a meaningful impact on the construction of affordable housing. But officials at all levels of government must do more to ensure that private investors target the neighborhoods that truly need the help.

Tax incentives alone won't be enough, however. The Housing Trust Fund and Capital Magnet Fund, which were established in the midst of the financial crisis to finance more affordable housing, should be scaled up. The Housing Trust Fund provides money to state housing authorities for the development of affordable rental units.

Housing authorities have flexibility in allocating these funds, because they are often in the position to assess how best to address their state's affordability challenges. The Capital Magnet Fund provides financial support to Community Development Financial Institutions and other nonprofit developers for increasing the supply of affordable housing.

Both of these programs have the infrastructure and flexibility necessary to scale up and get affordable housing where it's most needed.

Finally, communities should be given strong incentives to ease overly restrictive zoning and lower high fees for building new houses. Critical federal funds for roads and other infrastructure should be tied to how well communities are addressing their needs for workforce and affordable housing. Community development block grants could also be tied to such metrics.

However, policies to increase the supply of housing will take time to reap benefits. In the meantime, we need to ease the financial pressure on those hit hardest by the affordability crisis.

This means fully funding the nation's primary federal housing voucher program, as currently, three in four families eligible for such rental vouchers can't receive them. It would also make sense to increase the value of the vouchers to provide low-income families the chance to move to low-poverty, higher-opportunity neighborhoods. Doing so has been shown to boost lifetime earnings and open a window to escape poverty.

More than a decade after the housing market took down the economy, the nation finds itself in the throes of a different kind of housing crisis. Its effects are subtler, and perhaps for this reason it has gone largely ignored.

But the nation must address this housing crisis in earnest, lest an entire generation of families whose parents found in housing a critical path to building wealth, find it now blocking the way.

Some of the presidential candidates have put forth plans to address the affordable housing crisis. Indeed, virtually every candidate putting forward a plan has taken on the supply side with admirable muscle. But none have put housing policy at the top of their political agendas.

Given the depth of the affordable housing crisis and the existence of good, practical ideas to address it, it is time for the candidates to give it the attention it deserves.

Jared Bernstein, chief economist to former vice president Joseph Biden, is a senior fellow at the Center on Budget and Policy Priorities. Jim Parrott is a nonresident fellow at the Urban Institute and owner of Falling Creek Advisors. Mark Zandi is chief economist at Moodys Analytics.

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The conundrum affordable housing poses for the nation

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The nation is in the grip of an affordable housing crisis. A severe shortage of homes for working-class and low-income families is pushing up house prices and rents across the country, putting homeownership increasingly out of reach for many Americans and making rents so high that it is all but impossible for renters to save.

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Why There Isn't More Affordable Housing In The D.C. Area

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Affordable housing is, unfortunately, a topic that's largely misunderstood by the public. Myths and misconceptions about affordable housing developments are based on fear around negative stereotypes, property values, and the change it brings to neighborhoods-all of which are common arguments in opposition of a new affordable housing community.

In reality, the lack of safe, affordable housing is costing U.S. cities in several dramatic ways. Cities that fail to step up with affordable housing solutions drive out residents, lose potential workers, and discourage growth in their local economies.

While those who already have safe and stable housing may not feel the true cost of poverty, the effects are real and can have a serious detriment on our communities.

High housing prices can slow down a local economy, leaving jobs unfilled and less spending power in a community. But, when affordable housing is readily available, more opportunities become available for people at all income levels. More money is available for spending in a community, and long-term change can begin to take root. Let's take a look at some of the economic benefits of affordable housing.

1. More money spent in local communities

Maybe the most obvious economic benefit of affordable housing is the increase in discretionary spending. For most people, rent is the biggest and most important expense each month. When income loss threatens the ability to meet rent payments, the likelihood of spending money on anything other than the most basic needs harms the local economy. But when residents of affordable housing communities can make their rent payments, they're able to spend more on local purchases-and go beyond the bare necessities to buy healthy food, have better access to healthcare, and spend more at their nearby businesses.

2. Fewer evictions

Approximately 108 million Americans live in a rental home or apartment, and one-fourth of these renters spend more than half of their monthly income on rent payments. That means millions of people are one small unexpected expense away from losing their housing. The sacrifices folks were already making-medicine, childcare, groceries, education-in order to make rent have only intensified since the US unemployment rate rose to 10 percent during the COVID-19 pandemic.

The threat of evictions has always loomed for workers making just enough to pay their landlords every month. Now it's quickly becoming a reality for many more individuals. These repercussions will likely have long-lasting effects that impact generations in a family.

Evictions spark a cycle of instability for families. This has a ripple effect in their communities and harms a community's social and economic wellbeing. That's why housing stability is at the heart of affordable housing-it works to prevent evictions no matter the economic climate, and the social and economic return is well worth the investment.

Learn more about the " Social Return on Investment (SROI) of Eviction Prevention."

3. Healthier population means a healthier economy

A person's housing is a huge social determinant of their health. Among other factors like income and education, housing is a component that drastically influences a person's physical and mental well-being. Poverty severely limits people's options, which is why poverty is linked to a vast range of health problems, both acute and chronic in nature.

Most obvious is the quality of the housing itself. People in low-income housing that's poorly constructed or maintained may be exposed to lead paint, water contamination, and a slew of other environmental risks that are far less likely for more affluent populations. These environmental threats lead to chronic health issues for children, families, and seniors, which come at enormous and preventable cost to both the residents and their greater communities.

The buildings themselves are not the only risks. When a person's home is unaffordable, other critical health factors like healthy foods and doctors visits become farther out of reach. But when people have access to quality affordable housing options, they are far less likely to face environmental threats, and far more likely to have enough income for healthy food options and routine medical care-ultimately helping them lower the risk of severe chronic health problems. The more people can spend on adequate healthcare and fresh food, the better and healthier the local economy becomes.

4. More affordable housing creates more job opportunities

Another huge economic impact of affordable housing is the number of jobs it can create, both during the construction phases and ultimately through long-term societal growth. Let's consider the economic impact of simply building a new affordable housing building can provide: the real estate company will need to hire manufacturing and construction companies in order to build. Then, the housing centers will need staffing for maintenance, operations, and leasing jobs to keep grounds well-managed and clean for the residents it needs to attract and retain.

Of course, there are also many long-term opportunities that come with affordable housing in local economies. The healthier an economy is, the more jobs it will need. One of the benefits of affordable housing is that it encourages improved mobility that ultimately creates more jobs (and growth!) for our cities. Though some of these jobs are more immediate than others, the long-term benefits of affordable housing are profound and can lead to meaningful change in society.

5. Improved government infrastructure

With more residents able to pay property taxes, a local government is able to provide more for its citizens.How much can they really fund? A study from the National Association of Home "Building 100 affordable rental homes generates $11.7 million in local income, $2.2 million in taxes and other revenue for local governments, and 161 local jobs in the first year alone." This increased revenue may mean improved infrastructure, more green space, and other elements of healthy cities that keep its residents healthy and safe.

6. Better opportunities for investing in the future

Another long-term economic benefit of affordable housing is the chance to decrease childhood poverty. Providing children with a better and more equitable path forward is one of these long-term ways to build economic growth and healthier societies. Equipping kids with tools for social mobility isn't just a moral argument - it's also proven to create economic growth for communities. According to Mark Rank, a Professor of Social Welfare at Washington University, "It is estimated that for every dollar spent on reducing childhood poverty, the country would save at least $7 with respect to the economic costs of poverty."

A stable, affordable home is the foundation for everything else. It gives children the chance to establish healthy habits and focus on their goals and education. Generationally, this has massive impacts on educational achievement, economic output, and creating opportunities for residents to give back to their communities.

Learn how you can support affordable housing

Supporting affordable housing initiatives means investing in your community's well-being. CommonBond is dedicated to providing families with safe and stable housing because we believe homes are the foundation for everything in life. We also know that improving the lives of others helps everyone in our communities - if you think so, too, consider supporting our mission.

Donate Today!

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6 Ways Affordable Housing Can Boost Local Economies

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Affordable housing is, unfortunately, a topic that's largely misunderstood by the public. Myths and misconceptions about affordable housing developments are based on fear around negative stereotypes, property values, and the change it brings to neighborhoods-all of which are common arguments in opposition of a new affordable housing community.

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by Veronica Gaitán

Many social issues stem from a history of unstable, unaffordable, and poor-quality housing. Research shows that housing is the first rung on the ladder to economic opportunity for individuals and that a person's access to opportunity is intrinsically linked with that of the community at large. As the gap between rents and incomes widens, it is critical that professionals in fields outside housing-including health, education, and economic development, among others-understand its central importance.

The following research shows how housing can create better educational opportunities for children, contribute to healthier people and neighborhoods, and build stronger economic foundations for families and communities.

How housing affects educational outcomes

Children who live in a crowded household at any time before age 19 are less likely to graduate from high school and tend to have lower educational attainment at age 25.

Living in poor-quality housing and disadvantaged neighborhoods is associated with lower kindergarten readiness scores.

Homeless students are less likely to demonstrate proficiency in academic subjects. Passing rates for English language arts, math, and science exams are lower among homeless students than among their housed counterparts.

For typical households in the Fremont Unified School District, the impact of school quality on housing prices is more than three times greater than the impact found in studies in other regions. This impact matches the cost of private education for a child, suggesting that home prices act as tuition for in-demand public schools.

Near a high-scoring public school, housing costs 2.4 times as much, or roughly $11,000 more a year, as housing near a low-scoring public school.

In one study in New York City, improvements in a school's test scores are associated with higher home values and increased spending on residential investments (whether by owners or developers). Improving a school's scores by one standard deviation was correlated with a 1.8 percent increase in housing values.

Housing and financial instability often lead to children moving to poorer schools.

How housing affects health outcomes

Compared with New York City residents who stay in gentrifying neighborhoods, displaced residents who move to nongentrifying, low-income neighborhoods have significantly higher rates of emergency department visits, hospitalizations, and mental health-related visits for about five years after displacement.

Being behind on rent, moving multiple times, and experiencing homelessness are associated with adverse health outcomes for caregivers and children and with material hardship.

Households with poor housing quality had 50 percent higher odds of an asthma-related emergency department visit in the past year.

People with mental illness or an intellectual or developmental disability are less likely to receive responses to inquiries about rental housing and less likely to be invited to inspect available units.

Renter households with children are more likely to have asthma triggers in their homes than owners. They are also more likely to have at least one child with asthma.

In a study of single-parent families living in violent neighborhoods, parents met or exceeded the national average for self-reported physical health but fell below the mental health average. Forty percent reported moderate to severe symptoms of depression and reported higher levels of stress from worrying about financial instability and concern for their children's well-being.

In one study, older homeless adults who obtained housing during the study reported fewer depressive symptoms than those who were still homeless at follow-up.

How housing affects economic outcomes

Black per capita income is lower in regions with higher levels of economic and black-white segregation.

There is a positive relationship between high levels of automobile ownership and estimated rates of foreclosure and mortgage default, suggesting that transportation costs affect housing affordability.

In Detroit, strong efforts by residents, coupled with support from community development organizations and external assistance, led to increased neighborhood housing prices in middle- and working-class neighborhoods that lost value in the foreclosure crisis. Residents' efforts were less effective in higher-poverty neighborhoods with lower rates of owner occupancy.

The need for access to good jobs in central locations that is driving the lack of affordable housing shows that access to housing and access to opportunity are inextricably linked, which affects future intergenerational mobility.

Places with higher job accessibility by public transit are more likely to attract low-income households that do not own cars but have at least one employed worker, demonstrating that job accessibility by transit affects housing location choice.

Economically healthy cities tend to have higher rankings on economic, racial, and overall inclusion than distressed cities.

Federal housing assistance-from housing vouchers, to welfare-to-work programs, to financial coaching and incentives, and more- improves lives. Housing policies can be a tool to fight poverty and create upward mobility, making assistance a worthwhile and imperative investment in America's future.
Photo by Anastasios71/Shutterstock

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How Housing Can Determine Educational, Health, and Economic Outcomes

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by Veronica Gaitán Many social issues stem from a history of unstable, unaffordable, and poor-quality housing. Research shows that housing is the first rung on the ladder to economic opportunity for individuals and that a person's access to opportunity is intrinsically linked with that of the community at large.

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There has perhaps been more attention paid to affordable housing this year than any in recent memory, but it took a tragedy to make it so. The horror of Grenfell Tower started touched off a national conversation in the United Kingdom about inequality and the ways urgent community feedback gets lost in government bureaucracy. But more broadly, it is symptomatic of the insufficient attention being given to affordable housing everywhere as the world becomes more and more urban.

A third of all urban dwellers worldwide - 1.2 billion people - lack access to safe and secure housing. The gap is worst in lower- and middle- income countries, where some cities are growing so quickly that governments cannot build out services and infrastructure fast enough to accommodate new arrivals. The result is millions living in inadequate conditions and fraying trust in governments.

In the same week that more than 80 people died in West London earlier this year, a Nigerian court ruled the government had acted unconstitutionally when it forcibly evicted more than 5,000 people from waterfront slums in Lagos. The population of Lagos has nearly doubled in the last two decades and is on track to surpass 24 million people by 2030.

Similar stories play out every day in cities around the world. In March, a landslide at Ethiopia's largest dumpsite killed at least 65 people as it flattened precarious houses built on top. And during the run-up to the 2016 Olympic games, Rio is estimated to have displaced up to 60,000 people to make way for new facilities, highlighting the vulnerability of people in Brazil's favelas.

If current trends continue, by 2025 as many as 1.6 billion people around the world will lack access to affordable, adequate and secure housing. As urban populations grow, the housing gap will widen, exacerbating inequality and threatening the traditional view of cities as reliable drivers of economic growth. These are the conclusions of our new WRI Ross Center working paper on the housing crisis, part of a larger report on how to make cities more equal, safer and healthier places to live. This is an urgent challenge that will affect cities in all countries as we trudge towards a world of more than 9 billion people, 60 percent of whom will live in urban areas.

But there are solutions available that can improve the lives of people in cities - and improve cities at the same time.

The most critical recommendation is that city officials should not look to relocate people, but rather they should improve and secure existing areas of informal housing - and, critically, they need to involve communities in the process.

The conventional approach in too many places is to displace poor residents and destroy their homes to make way for new development. But this has an adverse effect on these populations. Many informal settlements and slums have strong social fabrics, home to people with economic and cultural ties to one another. These elements contribute to the kind of well-functioning neighborhoods that define great cities and could be harnessed by to accommodate people where they already are.

City leaders should encourage neighborhoods to develop from the ground up and build on this knowledge and energy rather than discarding it.

In Pune, a metropolitan area of more than 6 million people in India, the government began a redevelopment program in 2005 designed to improve conditions in slums. Three methods were used: relocation to new housing without community participation, upgrading of existing housing without community participation, and upgrading of existing housing with community participation. Those communities that took part in the participatory upgrading process experienced substantially better results, including improved living conditions and more functional neighborhoods with higher degrees of self-governance. In turn, they became less reliant on government assistance and had the organizational foundation to better address other problems, like insecurity and poverty. In the cases where communities were not involved in the process at all, many newly constructed facilities were eventually abandoned.

Even as it may look different from place to place, a bottom-up approach to fixing the housing gap and other related urban problems is one to be emulated. Organizations like Slum/Shack Dwellers International (SDI) are working on similar participatory approaches elsewhere in Asia and Africa. SDI helps organize a network of thousands of urban poor "federations," giving them access to lines of micro credit, stopping evictions and generally helping them voice community concerns in crowded and contested political spaces. Other examples include the Baan Mankong Collective Housing Program in Thailand, led by the Community Organizations Development Institute, and the Orangi Pilot Project in Pakistan, which has developed low-cost, community led-approaches to sanitation.

In cities, the reality is that the well-being of the under-served impacts the well-being of everyone, and housing is only one of the elements critical to the integrated approach that we need to create healthy, equitable and thriving cities. Forcibly relocating the poor will produce more inequality, higher infrastructure and transportation costs, higher carbon emissions and decreased productivity.

Context matters. The precise approach will be different for each geography, but we must find ways to preserve and encourage community and embrace everyone's right to the city. These lessons are salient in neighborhoods and cities throughout the world, from Lagos to London, Paris to Pune.

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The Crisis in Affordable Housing Is a Problem for Cities Everywhere

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There has perhaps been more attention paid to affordable housing this year than any in recent memory, but it took a tragedy to make it so. The horror of Grenfell Tower started touched off a national conversation in the United Kingdom about inequality and the ways urgent community feedback gets lost in government bureaucracy.