The Housing Affordability Crisis and the Solutions We Need Now

Making homes affordable and accessible

Housing is a basic human need, yet affordable housing is increasingly difficult for Americans to attain. Why is there a shortage of affordable homes? And how we can work together to bring solutions that will make homes affordable and accessible?

How we got here

Two decades of underbuilding and underinvestment in housing[1]—especially the construction of affordable homes—has created an enormous gap between housing supply and demand that will require a national effort to close. There is now between 5 million to 6.8 million housing units missing from the housing inventory[2]. This supply-demand gap has driven a consistent and drastic rise in home prices that puts the dream of homeownership out of reach for many Americans. Without action on the federal level, the shortage of adequate affordable homes will continue to worsen and have a host of negative consequences for homebuyers and communities.

The effects of Covid on housing

The “perfect storm” of increased demand and low supply over the past year has created a competitive housing market. In areas like New York, Boston and the Bay Area, severe supply shortages have skyrocketed home prices leaving millions of low and middle-income families unable to afford centrally located homes.

The median price for a single-family home in San Francisco has reached $1.8 million[3]; even with today’s low interest rates, that requires a monthly mortgage payment of roughly $7,500, assuming the family puts down the standard 20 percent.

The problem now even extends to rural areas across the country where many families are spending half or more of their income on housing[4].

Americans should be able to afford homes that are close to work and meet their needs. In many regions across the U.S., this is extremely difficult—if not impossible—for homebuyers to find.
The state of housing today

Over the last few months, the hope of returning to normalcy has fueled an increase in consumer spending overall. The housing market has followed suit: low mortgage rates and positive consumer sentiment have sparked a sudden interest in homebuying[5]. Housing prices are skyrocketing because the demand is so great, and the supply is so thin.

Here are some key statistics that illustrate the current state of the housing market:

  • In September, the national average price for a home was $380,000, 8.6% higher than last year and 20.6% higher than 2019[6].
  • The number of homes for sale right now is 22.2% below this time last year. The total number of homes actively available for sale is less than half of what we saw in 2019[7].
Looking ahead

There has been a small increase in new listings this year, which is optimistic for buyers. However, the gap in our nation’s housing supply will take a long-term national effort to close. Traditionally, the federal government’s housing policies have consisted of demand-side interventions like tax incentives for homeowners, which have been slashed in recent years and do little to help reduce the cost of housing. The biggest cause of surging home prices today is the low supply that existed before the pandemic and has been exaggerated by the pandemic. America needs supply-side interventions that will drastically increase the number of affordable homes on the market.

The American Property Owners Alliance supports federal policies that:

  • Incentivize the construction and rehabilitation of homes for low and moderate-income families
  • Offer incentives to convert unused or underutilized commercial properties into residential units
  • Provide funding for state and local government to enact pro-housing policies at the local level

The Alliance’s 10 million advocates will be activating soon to pass federal legislation that can help close the housing supply gap. Sign up to receive alerts when there is an opportunity to take action to help make homes more affordable for Americans.

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