Easy, Affordable Housing Policy Solutions to Tackle the Housing Crisis

Photo byBruce Katz

Introduction: Two weeks ago, we explored how the federal government could treat the housing crisis with the same urgency as its response to Covid-19 and the climate crisis. Our focus was on the need for national leadership to spearhead legislative, administrative, and organizational action. Today, we delve into two more vital aspects of this issue: mobilizing federal resources and reducing bureaucratic barriers that hinder housing development.

Mobilizing Federal Capital and Assets

The federal government is the largest allocator of capital and landowner in the U.S., which can be leveraged to address the housing crisis. The government’s ability to mobilize resources has been demonstrated in recent initiatives like the Inflation Reduction Act's $800 million dedication to clean energy.

Existing housing programs require more funding and, in some cases, new initiatives to meet the scale of the housing crisis. A serious response would involve reevaluating federal land and buildings, redirecting these assets toward affordable housing. The sale of federal property — currently limited to narrow and complex processes — should be streamlined for efficient use by local jurisdictions. Partnerships with local governments, private sectors, and philanthropic sources would also be instrumental in increasing housing development.

Additionally, the government can implement bold ideas, such as offering counter-cyclical interest rate reductions for construction loans during periods of housing shortages. Programs like Fannie Mae and Freddie Mac could be expanded to support secondary markets for construction financing, making it easier and cheaper to build affordable housing.

Reducing Barriers and Eliminating Complexity

Local zoning laws, building codes, and permitting processes have created significant barriers to housing production. Federally, many programs aimed at encouraging housing production have become too complex and slow. Simplifying processes and adopting 21st-century building codes and materials would remove these roadblocks. Programs like HUD’s Pathways to Removing Obstacles for Housing (PRO Housing) have already begun incentivizing cities to reform their housing regulations, but more aggressive approaches may be necessary.

Streamlining federal programs is crucial to combating the housing crisis. HUD, for example, could simplify regulations within the Housing Choice Voucher Program to ease landlord participation. Creating a national performance-based code for modular and manufactured homes would also speed up housing production.

The government can make small but meaningful changes to current legislation, unlocking billions in funding for housing. For instance, expanding the use of federal historic tax credits to convert office buildings into apartments, adjusting Department of Energy loans to fit housing projects, and streamlining income verification for Low-Income Housing Tax Credit projects could reduce delays and costs.

A Path Forward

Addressing the housing crisis requires both building on successful programs and adopting innovative approaches. By reorienting federal resources and breaking down bureaucratic barriers, the federal government can play a pivotal role in increasing affordable housing production. As we continue to develop specific recommendations, we welcome suggestions on how the government can meet the moment and tackle the housing crisis with urgency.