The American housing crisis is a complex issue, deeply rooted in policy decisions that span decades. It’s a story of missed opportunities, short-sighted policies, and, at times, a stark lack of political will. This post dives into the ways in which political decisions have contributed to this crisis, backed by data and references that highlight the scale of the failure.

First, let’s look at the numbers: According to the National Low Income Housing Coalition, the U.S. has a shortage of 7 million affordable rental homes for extremely low-income renters. Only 33 affordable and available homes exist for every 100 extremely low-income renter households. This stark statistic sets the stage for a deeper understanding of policy missteps.

Zoning laws, often decided at the local level but influenced by broader political attitudes, have played a significant role. Many areas, especially affluent suburbs, have enacted restrictive zoning that limits high-density housing or affordable housing developments. This NIMBY (Not In My Backyard) approach has significantly constrained the supply of affordable housing. Research from UCLA’s Ziman Center for Real Estate highlights how zoning laws in cities like Los Angeles have stifled the creation of sufficient affordable housing.

Tax policy also plays a critical role. The Mortgage Interest Deduction (MID), a significant housing subsidy, disproportionately benefits higher-income households, doing little to assist those in dire need of affordable housing. The Center on Budget and Policy Priorities notes that the MID and other tax benefits for homeownership are skewed towards the wealthy, doing little to alleviate the housing burden on low and middle-income Americans.

Federal housing funding has seen significant cuts over the years. According to the Center on Budget and Policy Priorities, since 2010, non-defense discretionary funding, which includes key housing and community development programs, has been cut by about 12% after adjusting for inflation. These cuts have had a profound impact on programs like public housing and Section 8 vouchers, essential tools in the fight against homelessness and housing insecurity.

The 2008 financial crisis, precipitated by deregulation in the financial sector and risky mortgage lending practices, led to a wave of foreclosures, further exacerbating the housing crisis. The aftermath saw a significant shift in housing stock from owner-occupied to rental, often owned by institutional investors, which has driven up rental prices. A study by the Federal Reserve Bank of Philadelphia found that neighborhoods with high concentrations of homes owned by institutional investors saw significantly higher increases in rents.

American housing crisis is a multifaceted problem, deeply intertwined with decades of political decisions. From restrictive zoning laws and skewed tax policies to cuts in federal housing funding and the fallout from financial deregulation, politicians have played a significant role in creating and exacerbating this crisis. Addressing this issue will require a concerted effort to reverse these policies, prioritize affordable housing, and ensure that all Americans have access to safe, affordable housing. The data and trends are clear; the path forward requires political courage and a commitment to change.

Resources to Learn More

The National Low Income Housing Coalition’s (NLIHC) report “The Gap 2023” has a ton more information. This report outlines a staggering shortage of 7.3 million affordable and available rental homes for extremely low-income renters in the US, highlighting the significant role of federal investment (or lack thereof) in exacerbating the housing crisis​​​​.

https://nlihc.org/resource/nlihc-releases-gap-2023

https://nlihc.org/news/nlihc-releases-gap-2023-shortage-affordable-homes

Further analysis by Housing Matters expands on these findings, emphasizing the worsening shortage of affordable homes due to factors like the COVID-19 pandemic, inflation, job losses, and rising rent prices. The report points to a critical need for substantial, long-term policy solutions, including significant federal investments in affordable housing programs and local land-use and zoning reform policies to combat the shortage​​.

https://housingmatters.urban.org/research-summary/addressing-americas-affordable-housing-crisis

These sources provide a comprehensive look at the data and policy implications driving the affordable housing shortage in the US, underscoring the need for a multi-faceted approach to address the crisis.

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