By Ashwin Prabu
With a housing shortage of 3.8 million units, extremely high construction costs and strict zoning requirements, America has an affordable housing crisis. The relatively few new homes in development are too expensive for the average American. It is time to address this pertinent issue and increase national accessibility to houses.
Graphic From: Supply of new U.S. housing (1968-2017). U.S. Census Bureau and Department of Housing and Urban Development, Institute for Building Technology & Safety. This graph illustrates that the supply of new U.S. housing is at record lows.
- Redlining: The historic and systemic denial of bank loans to predominantly Black and Brown communities. This has historically impeded their ability to purchase houses and accumulate wealth and continues to do so.
- Zoning restrictions: Regulations dictating what types of buildings or houses are allowed to be built in specific locations. Restrictions are usually decided at the local and municipal levels.
Important Facts and Statistics:
- According to data collected from Jan. 20 to Feb. 1, 2021, an estimated 13.2 million adults living in rental housing — nearly one in five of home renters — were behind on rent.
- Between 2000 and 2016, 61 million eviction cases were filed in the United States.
- Across cities nationwide, people of color make up approximately 80 percent of those facing eviction.
1. Require state and local governments to impose a $5,000 vacant property tax.
If a property remains vacant for more than 100 days, then the owners will have to pay a $5,000 tax for every year that this is the case. This vacant property tax will raise $7.5 billion annually for states across the U.S. to fund affordable housing projects.
2. Implement a reduced-tariff trade agreement for aluminum and lumber to lower costs of home development.
In 2018, increases in tariffs on aluminum and lumber imports from Canada, Mexico and the European Union caused the prices of these materials to increase for construction companies. These costs burden consumers through increased housing prices. A trade agreement that scales back the Trump administration tariffs will drastically decrease the costs of these materials for construction companies, thus resulting in cheaper prices.
3. States should work with municipalities to relax zoning restrictions
Local and municipal zoning restrictions limit commercial and residential properties to very few areas. This interference in the market is preventing the supply of housing from meeting the demand. Since this problem is unique to each locality, cooperation between state governments and these local governments is necessary to reach a consensus on how to relax zoning restrictions and create urban zoning areas near transit centers that allow for high density housing. Doing so allows the supply of houses to meet the demand while reducing housing costs. Additionally, relaxing zoning restrictions, specifically in rural areas, will encourage rural development and help increase the population in rural areas.
4. States and localities should provide tax breaks of up to 30 percent to landlords that reduce rental fees for tenants
States and localities will have discretion in determining eligibility and how much of a reduction in rental fees is required to receive certain tax breaks. If required to pay less, tenants will better be able to meet their rental payments, ultimately reducing the amount of rental assistance the Department of Housing and Urban Development has to provide.
5. Instruct local governments to run information campaigns in communities historically affected by redlining.
Many prospective homeowners, particularly in areas that have historically been affected by redlining, are discouraged by down payment prices. However, a recent survey found that 70 percent of Americans are unaware of available down payment assistance by state governments. It is the responsibility of local governments to educate their citizens on these opportunities through local newspapers, media outlets and town halls. This will inspire previously discouraged people from underrepresented communities to buy houses.
Why This Initiative is Important:
This proposal will help improve almost all aspects of American lives. An increase in affordable housing will allow people to live closer to where they work, reducing transportation costs and improving job security. This lower commute time will then boost worker productivity while improving the economy. When individuals live closer to their work, they are able to spend more time with family and engage in leisure activities. Additionally, on a societal level, removing zoning restrictions will relieve overpopulation in large cities, as more people will be able to move to the suburbs and rural areas. Ordinary Americans are suffering due to the lack of affordable housing, and it is time to help them.
- Anticipated annual federal costs: $3.5 billion.
- Anticipated annual federal revenue: $7.5 billion.
- Housing makes up about 15 percent of America’s GDP. It is necessary to further incentivize development, lower rents and environmental conscientiousness.
Go to JoinONC.com to see how we came up with these numbers.
The following individuals worked with our student interns and contributed expertise, wisdom and moral support in the development of this proposal:
- Ron Meyer: CEO, RMA consulting.
- Lynn Von Koch-Liebert: Deputy Secretary of Housing and Consumer Services, California Business, Consumer Services and Housing Agency.
- Wade Kilefer: Co-founder, KFA Architecture.
Note: Not all participants agree with every aspect of this proposal. To arrive at a proposal that takes multiple views into account requires compromise and difficult decisions. For individual commentary on this proposal and more detail, go to joinONC.com. We invite you to add your comments as well.
“The COVID-19 Eviction Crisis: an Estimated 30-40 Million People in America Are at Risk.” The Aspen Institute, 15 Sept. 2020, www.aspeninstitute.org/blog-posts/the-covid-19-eviction-crisis-an-estimated-30-40-million-people-in-america-are-at-risk/.
Cox-Khalfani, Lynnette. “Down payment assistance programs for all homebuyers.” HSH, September 4, 2015. www.hsh.com/finance/mortgage/down-payment-assistance-programs-for-all-homebuyers.html.
“Great Time for a Vacant Property Tax.” Center for Economic and Policy Research, 26 June 2020, cepr.net/great-time-for-a-vacant-property-tax/.
“How Zoning Shapes Our Lives.” Housing Matters, 9 June 2020, housingmatters.urban.org/articles/how-zoning-shapes-our-lives.
Irvine, Calif. “Nearly 1.5 Million Vacant U.S. Homes in Q3 2018 Represent 1.52 Percent of All Single Family Homes and Condos.” ATTOM Data Solutions, October 28, 2018.
Passy, Jacob. “Trump’s steel and aluminum tariffs may increase costs for home buyers and renters.” MarketWatch, May 31, 2018. www.marketwatch.com/story/what-home-buyers-and-renters-need-to-know-about-trumps-steel-tariffs-2018-03-05.
Swanson, Jann. “Sluggish Construction Challenges the Housing Market.” Mortgage News Daily, December 6, 2018. www.mortgagenewsdaily.com/12062018_residential_construction.asp.
“Tracking the COVID-19 Recession’s Effects on Food, Housing, and Employment Hardships.” Center on Budget and Policy Priorities, www.cbpp.org/research/poverty-and-inequality/tracking-the-covid-19-recessions-effects-on-food-housing-and.
Yale J., Aly. “Here’s How Many New Homes It Would Take To Fix The Housing Shortage.” Forbes, January 20, 2020. www.forbes.com/sites/alyyale/2020/01/22/the-housing-shortage-is-badbut-heres-how-to-fix-it/#6ca9e70d1461.