Finding Solutions to the Affordable Housing Shortage

Both lower income as well as higher income renters are having more and more difficulty finding affordable rental housing. According to a new study from the Harvard Joint Center for Housing Studies (JCHS), households with annual incomes of $75,000 or more are now the driving force in the rental market, leaving renters in the low-to-middle income range with fewer affordable housing options.

Extremely low-income renters earning less than $15,000 a year are struggling the most, with 82.8 percent of them paying more than 30 percent of their income towards rent.

JCHS research found that between 1990 and 2017, nearly 4 million low-income rental units renting for less than $600 per month were lost due to a variety of factors, such as:

  • not enough low-rent homes are being built;
  • a lack of “downward filtering” when higher-rent homes shift to lower-rent as they age;
  • an increase in “upward filtering” of rental homes when lower-rent homes are converted to higher-rent homes.

Clearly, finding ways to create more affordable housing has become paramount. The following are some methods that may offer solutions to the affordable housing shortage.

The Affordable Housing Credit Improvement Act

The low-income housing tax credit (LIHTC) program encourages the development and rehabilitation of affordable rental housing by awarding nonrefundable federal housing tax credits to housing developers. Typically, these developers sell their tax credits to outside investors in exchange for equity in the project. This practice reduces financing costs so that tax credit properties can potentially have lower, more affordable rents.

The Affordable Housing Credit Improvement Act is proposed legislation that would:

JCHS analysis indicates that implementing these provisions could create hundreds of thousands of affordable rental units.

Inclusionary Housing

Inclusionary housing, also known as inclusionary zoning, refers to local government zoning ordinances requiring that a given share of new housing developments be affordable to individuals with low-to- moderate incomes. For example, an inclusionary housing program might require housing developers in a particular city to sell or rent 10 to 30 percent of new residential units to lower-income individuals. For more information about how inclusionary housing works, watch this short video created by Grounded Solutions Network.

Community Land Trusts

Community land trusts (CLTs) are nonprofit organizations that develop and steward affordable housing and other communal assets on behalf of a community. Governed by a board of residents and public representatives, CLTs ensure that community assets are maintained for the future and offer shared equity home ownership opportunities for families and communities.

CLTs can develop rural and urban agriculture projects and commercial areas to serve local communities. However, the primary purpose of CLTs is to create homes that remain permanently affordable, providing home ownership opportunities for lower-income families for generations to come.

Shared Equity Home Ownership

Shared equity home ownership refers to a variety of programs that impose cost restrictions on the resale of subsidized homes. Typically, a nonprofit or government agency provides a subsidy to make a home more affordable to a lower income buyer. The home’s sale price is then restricted each time it is sold to keep it affordable for subsequent low-income families who purchase the home.

This self-sustaining home ownership model creates long-term, affordable home ownership opportunities, providing wealth building for low-income families, while also preserving the community’s investment.

Close the Color Gap

This country also has also has a long history of housing segregation and racist housing policies  that have created significant gaps in the access that African-Americans have to affordable rental housing and home ownership, the consequences of which have been significant and enduring.

Listen to a podcast book review of The Color of Law: A Forgotten History of How Our Government Segregated America, by Richard Rothstein to find out about the government housing policies that violated the constitutional rights of African Americans, and what the author believes should now be done to rectify those wrongs.

The information on this website is intended as general legal information only and should not form the basis of legal advice of any kind. Individuals seeking specific legal advice should consult a lawyer.



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New Jersey lawyer turned blogger, podcaster and legal changemaker.