California has an affordable housing problem. The average monthly rent in the state is 50 percent higher than the national average; in 2015, the average price for a California home was 2.5 times the national average. Since then, prices have only continued to rise, pushing the shortage of affordable housing in the Golden State toward a full-blown crisis.
Unfortunately, California’s not alone. In urban markets across the U.S., the costs of renting or buying a place to live have skyrocketed over the past decade. In some cities, increased housing costs are an unexpected consequence of unrelated policies, but in many cases, housing cost increases reflect a supply-and-demand problem: with few available houses and apartments in desirable areas, sellers and landlords in those areas can increase prices to whatever the market will bear.
Some cities and states have acknowledged the problem and are taking a variety of measures to address the issue. Meanwhile, some decisions by Congress may exacerbate the problem.
Regardless of the measures that communities end up choosing to address their own housing shortages, vendors in construction, urban planning, consulting services and other sectors will be needed to help communities across the U.S. take action on affordable housing.
In California, a state senator has proposed overriding local restrictions on housing construction close to transit stations to allow developers to build high-density housing on mass transit corridors. The proposal is controversial: some city mayors support the idea, but others see it as an attack on the rights of municipalities to determine who can build what and where. It remains to be seen whether pressure from under-housed citizens and their representatives will lead to change, or whether landowners and politicians happy with the status quo will win out.
At a federal level, it’s estimated that the passing of the Tax Cuts and Jobs Act (TCJA) will contribute to the development of 235,000 fewer affordable housing units across the U.S. in the decade to come. This is because the TCJA lowered the corporate tax rate, which as a consequence has dis-incentivized developers to seek out tax credits tied to building and rehabilitating affordable housing. This situation has already led to the devaluing of affordable housing tax credits.
In February, the Trump administration released a budget proposal for fiscal 2019 that includes an $8.8 billion cut to the budget of the Department of Housing and Urban Development (HUD). The cuts target several community development and housing assistance programs, which could make the affordable housing crisis worse, but Congress hasn’t approved the proposed budget yet.
How Are Local, State and Foreign Governments Addressing the Housing Shortage?
In 2015, media outlets were already reporting on the housing shortage and identifying the cities where development was increasing to address the issue. At that time, the Texas cities of Austin, Houston and Dallas were leading the way in new housing construction, with North Carolina’s Raleigh and Charlotte also in the top 10. In 2014, Houston built almost as many single-family homes as the entire state of California did that year. But California has taken other steps to address the crisis: in June 2017, state lawmakers passed bills to increase residential construction and to provide funds for subsidized housing.
Smaller towns in other states have also taken it upon themselves to address housing shortages. North Platte, NE has invested in a housing study to explore solutions the town could implement, while the city of Prineville, Ore. has rezoned industrial land to allow housing in order to accommodate workers building data centers for Facebook.
The housing shortage is also happening in Canada, where governments are testing out private-sector partnerships to address the problem. The federal government in Canada has been consulting with short-term rental company Airbnb to develop long-term housing solutions in urban markets; since then, two Canadian provinces have struck agreements with the company to collect tax revenue from short-term rentals. These agreements set a precedent that may serve as a model for cities around the world, including in the U.S.
How Vendors Can Help
Vendors in construction, urban planning, engineering, consulting and other sectors can contribute to improving housing in America by reaching out to the three levels of government in their regions. Vendors can find out what their city, county or state is doing to address the housing crisis; if there are new tax credits or programs in place for affordable housing development, they can ask how to get involved. Vendors can also partner together to pursue government-funded building projects.
Real action to address the lack of affordable housing across the U.S. will require innovation and effort from every level of government, as well as the participation of the private sector. Each community will have to decide on solutions that are tailored to their unique situation, and local vendors will be essential to creating the future of affordable housing in their respective areas - one home at a time.
Nathan Munn | BidNet.com