3 Ways Experts Would Solve the Housing Crisis
- Feb 04, 2020
Housing affordability has become a major issue across the U.S., and one that is impossible to ignore. The median rent for new units built in 2018 and 2019 was $1,620—a 37 percent real increase in median rents for new units, if compared back to 2000, according to a report released last week by the Joint Center for Housing Studies of Harvard University.
“Fundamentally, there’s lots of high demand, not enough supply, and that’s resulting in higher rents for everybody,” said Chris Herbert, managing director of the Joint Center for Housing Studies, in a panel discussion coinciding with the report’s release last week.
The multifamily pipeline is now the fullest it has been since 1973, with more than 600,000 units currently under construction, most of which is geared toward the higher-income renters. But it’s not just renters on the lower end of the income spectrum that are facing affordability issues. Rising construction costs and steep land prices are leading to pricier rents for high-end renters.
So what’s to be done to really get housing built? Here are three takeaways experts from across the housing spectrum shared at last week’s event.
Multifamily construction stalled after the financial crisis—and has never quite gotten back to what it was. That needs to change, said Minnesota Housing Commissioner Jennifer Leimaile Ho, a former senior advisor at the U.S. Department of Housing and Urban Development.
“When the housing market crashed, we stopped building, and we didn’t stop growing,” said Ho. “It’s about getting back to levels of production. It’s just taken us a long time to recover since the market crashed.”
To really address the need for more housing, units need to be built at scale, something that is impossible without the private sector, panelists argued.
“Only the private sector can come in and address this problem at scale,” said Neel Kashkari, president & CEO of the Federal Reserve Bank of Minneapolis.
City regulations can be a big barrier to getting housing built. In 2018, Minneapolis lawmakers launched the most ambitious plan ever seen in the U.S. in order to tackle the city’s affordable housing crisis. Among other things, the plan will upzone a vast majority of the city to build more housing at a higher density.
“If you look at policies in big cities, zoning is a big step in the right direction,” said Tony Barranco, senior vice president of real estate development at the Ryan Cos., citing the Minneapolis 2040 plan. “But you also have to be cautious about other policies that constrain supply.”
And when thinking of the whole housing equation don’t forget transportation, argued Herbert, one of the most important factors in any housing development or project.
“Transportation policy is a really important piece of this,” said Herbert. “We could invest in rapid transit systems to a greater degree than we have now.”
Rehaul government programs
The federal government’s role is often left out talk surrounding affordable housing, since many housing policies come down to land issues, which are local and state. But the federal government could invest more in supporting housing efforts and overhaul existing programs.
“Take the existing programs and grow them or completely reconceptualize them,” said Ho.
“As a housing advocate you don’t want to criticize programs out there because you don’t want them to go away. But there’s an opportunity to reconceptualize it. We should take a minute and rethink this. I’m not certain having our whole housing policy built around tax credits and tax deductions is working.”