How should we address the affordable housing crisis?

For nearly four decades, governments in the United States have poured billions of dollars a year into subsidizing the construction of income-restricted apartments intended for households earning below a set share of the local median income. The impulse is understandable. When rents rise faster than wages, the moral and political urge to do something is strong. Yet a large body of economic research has reached a stark conclusion. As designed and implemented in many states and cities, construction-driven affordable housing programs are an expensive, slow, and often poorly targeted way to help low-income families. Developers capture a sizable portion of the value, unit costs are high, and long affordability periods sometimes end just as the subsidy era winds down, pushing rents back toward market levels. When a region has a fixed pool of labor and materials, every five subsidized units can displace four unsubsidized ones, which means the net new supply is painfully small relative to the public cost. At the extreme, taxpayers can end up paying more than a million dollars for a net gain of a single home.

It is tempting to read those facts and immediately pivot to vouchers as the obvious solution. Vouchers are elegant on paper. Rather than fund the supply side and hope that subsidized units trickle down to the people who need them most, vouchers fund the demand side by bridging the gap between what a household can afford and what a landlord charges. In practice, vouchers face their own limits. They are rationed, waitlists stretch on for years, and families who finally receive assistance embark on a second struggle to find a landlord who will accept a voucher in a neighborhood where they want to live. Even when a lease is secured, voucher rules, inspections, and renewal risks can create stress for both tenants and owners. In tight markets where vacancy rates are low, vouchers chase too few available homes, and those homes are often clustered in poorer neighborhoods that offer less opportunity for upward mobility.

A growing chorus of analysts takes a step back from this subsidy versus voucher tug-of-war and asks a different question. If the entire region is short millions of homes, if land use policy constrains where and how we can build, and if construction costs rise faster than inflation, then no amount of clever subsidy engineering can solve the fundamental arithmetic of scarcity. When supply is structurally constrained, public money risks becoming a very expensive bandage on a deeper wound. The uncomfortable conclusion is that availability is the fulcrum on which affordability rests. When regions permit and encourage more housing of many types where people actually want to live, rents flatten, price growth cools, and low-income interventions can be smaller, simpler, and more effective.

This line of thinking often leads to a blunt policy prescription. Scrap complex subsidy schemes, loosen land use rules, open the fringe to new single-family subdivisions, and watch prices normalize as builders meet demand. Advocates of this view point to the 1970s and 1980s, when several coastal states embraced urban growth boundaries and strict growth controls. Prices surged in those places while remaining tame in states that allowed outward expansion. If restrictive planning created scarcity, the argument goes, then lifting the restrictions will restore balance. That perspective highlights a crucial truth about the supply side, but it can also understate the political and practical barriers to greenfield expansion and overstate the ability of any single housing type to meet modern needs.

A more nuanced reading starts with an uncontested fact. The United States is not building enough homes. Depending on the methodology, the shortfall is measured in the millions. The gap did not appear overnight. Single-family construction collapsed after the Great Recession and took years to recover. Demographics shifted, with household formation rebounding after a slow period. Material costs and labor shortages pushed per-unit expenses higher. In many metro areas, land values rose even faster than construction inputs, which means the underlying plot absorbs a larger share of a project’s total cost. Regulation plays a role, from minimum lot sizes that dictate low density even where higher density would be appropriate, to parking minimums that make small infill projects uneconomic, to discretionary approvals that inject time and uncertainty into the pipeline. The cumulative effect is a system that produces too few homes at too high a cost and too slowly to stabilize prices.

Once we accept that frame, the policy conversation can be reframed around three simultaneous goals. First, expand overall housing availability with rules that encourage production at scale. Second, target near-term support to households that would otherwise be displaced or rent burdened while the supply response ramps up. Third, design that near-term support with administrative simplicity and portability so families can actually use it.

On the first goal, there is no single silver bullet. Regions that only legalize apartments in a few corridors or only open greenfield land to low density sprawl will struggle to match the diversity of demand. People want different things at different stages of life. Young adults want smaller, cheaper units near jobs and transit. Families value space, yards, and good schools. Seniors need accessible homes near healthcare and community. A healthy market offers all of it. That means legalizing and streamlining a broad menu of options. Gentle density in established neighborhoods through accessory dwelling units and small multiplexes. Missing middle forms on transit corridors and near job centers. Larger multifamily buildings where infrastructure can support them. Suburban subdivisions on the edge where land is relatively cheap and buyers want houses. Faster approvals with clear rules. Predictable fees that reflect actual infrastructure costs. Flexible parking policies that match real usage rather than outdated formulas. When a region tackles all of these items at once and treats them as a system, builders can respond with volume and variety, which is the key to bending the cost curve.

On the second and third goals, the practical question is how to support families right now. Vouchers deserve a role, but the current system needs repair. Funding is insufficient. Portability between jurisdictions can be clumsy. Landlord participation is undermined by payment uncertainty and inspection delays. A voucher that sits in a drawer for months is not help. Some cities and counties have addressed these pain points with landlord incentive payments, risk sharing for damage beyond deposits, dedicated staff who troubleshoot inspection backlogs, and rapid payment systems that make the program feel like a dependable revenue stream rather than a gamble. Source of income protections make a difference when paired with enforcement that is firm and fair. When these operational details are handled well, voucher placement rates improve and families have better choice.

Cash assistance is the bolder idea that has been tested and largely forgotten, which makes it ripe for reconsideration. The concept is straightforward. Provide predictable cash transfers to low-income renters and let them apply the funds to their housing as they see fit. Cash eliminates the stigma that can attach to vouchers. It reduces administrative friction because you do not need the same level of unit-by-unit compliance checks. It gives households real agency to trade off space, location, and amenities in the way that best fits their needs. It makes relocation for better jobs or schools easier. Critics worry about potential misuse or upward pressure on rents if landlords capture the subsidy. There are ways to mitigate those risks. Time the assistance to be countercyclical so it ramps when unemployment rises and recedes as the job market strengthens. Pair cash with robust consumer protections and simple budgeting support, not paternalistic micromanagement. Ensure the assistance is portable across jurisdictions so families can move toward opportunity. And most importantly, embed cash in a strategy that is aggressively increasing supply so added purchasing power does not simply chase the same scarce units.

What about the charge that dense multifamily buildings are inherently more expensive than houses and therefore a poor use of subsidy dollars? The honest answer is that costs depend on context. Four and five story concrete and steel projects in high cost cities are expensive per square foot, often more so than wood frame single-family homes on cheap land at the fringe. But those same multifamily buildings place more homes close to transit, jobs, and services, which reduces transportation costs for residents and the long run infrastructure burden for the region. Infill development can reuse streets, water, and power already in place rather than extend new miles of pipes and pavement. In fast growing metros where demand for central locations is strong, legalizing mid-rise infill is a necessary complement to suburban expansion, not a substitute for it. In lower cost metros with abundant land, greenfield single-family housing may be the fastest way to add volume. The point is not to declare one form universally superior but to let each form compete on a fair playing field and allow households to choose.

Another recurring concern is the 30-year cliff that haunts many subsidized projects. When the affordability period ends, rents jump, and the community loses the very units it paid to create. There are policy fixes here too. Extend affordability periods to match the expected life of the building, not the life of the initial financing. Design refinancing triggers that preserve affordability in exchange for modest capital injections to cover renovation. Use community land trusts and public land leases that remove the speculative land component from the cost structure, which keeps long run rents lower without constant subsidy. Where public agencies own land near transit or schools, ground leases can secure affordability for generations while inviting private capital to fund construction and management.

It is also important to acknowledge the political economy of housing. Homeowners fear change that might dent property values or strain parking and schools. Environmental groups may resist greenfield development even when it is designed with conservation in mind. Agricultural interests resist the conversion of farmland. Urban residents worry about gentrification that prices them out of neighborhoods they have built and sustained. These concerns deserve real engagement rather than slogans. Good policy makes change beneficial and predictable rather than arbitrary and scary. It pairs upzoning with infrastructure investment so new residents support better services for all. It respects neighborhood character without freezing cities in amber. It protects tenants from displacement through right to return programs and targeted property tax relief for long-time owner occupiers on fixed incomes. It uses transparent planning that allows communities to see where growth will go over the next decade, not over the next zoning board meeting.

What should a practical agenda look like for leaders who want to bring prices down and help families now? Start by removing the most egregious barriers to production across the whole housing spectrum. Legalize small infill homes where they are banned. Streamline approvals for mid-rise apartments on transit corridors. Open expansion areas where infrastructure can be delivered efficiently and where buyers want single-family homes. Replace subjective discretionary approvals with objective rules and predictable timelines. Align fees with actual service costs and let developers pay at occupancy rather than upfront to reduce carrying costs. Expand training for the construction trades to alleviate labor bottlenecks and support productivity enhancing technologies that make building faster and safer.

At the same time, upgrade safety net tools so they function in the real world rather than on a budget spreadsheet. Fund vouchers to meet actual need, not a small fraction of it, and fix the mechanics that prevent placement. Pilot and evaluate simple rental cash supports that reach families quickly with minimal overhead, and learn from both successes and missteps before scaling. Focus any remaining construction subsidy on durable affordability, such as land trusts, public ground leases, and mixed income projects that cross subsidize lower rents without perpetual infusions of taxpayer funds. Measure success not by ribbon cuttings but by reductions in rent burden, increases in mobility, and improvements in neighborhood opportunity.

Finally, keep perspective on the goal. The point of housing policy is not to pick a side in a philosophical fight between apartments and houses or between planners and markets. The point is to ensure that a teacher, a care worker, a delivery driver, a recent graduate, and a retiree can all find a dignified place to live that fits their budget and their life. That will take more homes. It will take fewer bottlenecks. It will take tools that families can actually use. Subsidies have their place when they are designed to last and targeted where they do the most good. Vouchers can help when they are funded and managed well. Cash assistance can restore agency and cut through red tape in a way that vouchers never will. None of these will succeed on their own if the fundamental supply problem is ignored.

Housing policy is hard because it lives at the intersection of economics, politics, and everyday life. That is exactly why it is worth getting right. When we do, the dividends show up in lower rent burdens, stronger family finances, shorter commutes, better access to jobs and schools, and communities that welcome newcomers without pushing long-time residents out. The practical path forward is not a single bet on a single idea. It is the steady work of building more homes of many types, in more places, while using simple and portable supports that help people pay the rent until the market catches up. In other words, availability first, affordability through abundance, and assistance that is fast, flexible, and focused on people rather than projects.