Making Housing More Affordable

"Affordable housing now" written on cardboard sign.

Photo credit: Fumigene


From analysis of the issue to putting programs in motion

The MacArthur Foundation recently released the results of the “How Housing Matters” survey where 1,401 Americans were polled about housing affordability. The survey found that the “majority of Americans believe that government from the local to federal level is serious about addressing housing affordability”, but when it comes to the overall future of housing, the respondents “tilted towards pessimism”.

Safe and affordable housing is not only important to people’s health and well-being but it can be one of the foundations for efficient functioning of economies.

In the PEMCO Realty article, “How Can We Make Housing More Affordable?”, four ways are presented for cities to cultivate an environment for more affordable housing creation:

  • Unlocking the land. In the largest cities, many parcels of land are unoccupied or underutilized. Some of this land can be released for development or sold, to purchase land for affordable housing. Private land can be made available and incentivized through density bonuses, increasing the permitted square footage on a plot of land and as a result, its value. In this scenario, the developer must provide land for affordable units.
  • Reducing construction costs. Residential housing is still built the same as it was built 50 years ago. Builders should adopt more efficient construction methods such as standardized designs and prefab components that are assembled off-site. Project costs could be reduced by 30 percent and completion schedules could be shortened by about 40 percent by doing this.
  • Improving maintenance and operations. Up to 30 percent of the cost of housing is operations and maintenance, which can be reduced by retrofitting homes with new windows and energy efficient insulation. Maintenance cost can be reduced by helping homeowners find registered/ licensed suppliers and consolidated purchasing of maintenance-related supplies.
  • Lowering financing costs for developers and homebuyers. Making improvements to underwriting would help lenders make safer and sounder mortgages to lower-income borrowers. Contractual savings programs could help lower-income buyers to accumulate down payments and allow for smaller and less risky loans, savers could be incentivized in this type of program with offering capital for low-interest mortgages. Financing costs of developers could be reduced and made less risky by government guaranteeing buyers or tenants for completed units.

Housing experts, government, and affordable housing advocates have analyzed and proposed initiatives to fix the growing housing affordability problem; several cities have initiated affordable housing legislation and programs ranging in incentive strength and legislative commitment. Atlanta, Denver, Honolulu, New York City and Boston all grapple with affordable housing challenges, their approach to ameliorating the growing affordable housing problems are highlighted below:

Atlanta, while well known as one of the more affordable large metro areas in the U.S., is seeing less affordability in some formerly affordable intown neighborhoods. This has spurred several initiatives spanning from private corporations to local government. The Atlanta Beltline in conjunction with Invest Atlanta created the Atlanta Beltline Housing Initiative Program (HIP). The HIP is designed to give qualified families opportunities to buy or renovate homes along the 22-mile Atlanta Beltline’s trails, future transit and parks.

Eligible participants could receive downpayment funds of 25 percent of the cost of the home or up to $45,000 and get up to $25,000 to make needed repairs. The Atlanta City Council bolstered the HIP with the Atlanta Beltline Affordable Housing Trust Fund (BAHTF) to promote the creation and preservation of affordable housing within the beltline neighborhoods.

Denver, in contrast to Atlanta, is not known for being as affordable; this is an unintended consequence of a red-hot housing market with persistently low inventory. With single-family and condo purchases increasingly being unattainable for many millennials, it’s inevitable that apartment rental costs would rise into less affordable territory. Denver’s City Council is considering changes to put more teeth into the city’s affordable housing preservation ordinance. In the next five years, 4,500 housing units would be eligible for conversion to fast-rising market-rate rents when their affordability covenants or restrictions expire.

One of the proposed changes to the 2000 ordinance is that landlords would be required to give a full year’s notice in advance of a market-rate conversion or if they’re intending on selling the property. Housing advocates and Council members say the ordinance rewrite would give Denver important new preservation tools as part of Mayor Michael Hancock’s expanded affordable housing strategy; which calls for raising $15 million a year to subsidize new projects and help prevent the loss of older affordable properties.

Honolulu, one of the least affordable cities for nearly every cost of living metric is especially seeing affordability fall in single-family purchases and apartment rental costs. Honolulu has an affordable housing policy which requires any developer seeking an approval for a zoning change to set aside 30 percent of their units for moderate income; according to the city’s Department of Planning and Permitting, a little over 2,000 affordable units were constructed between 2011 and 2014.

Honolulu defines affordable housing as housing affordable to people earning 140 percent of area median income (AMI) or below, which is $80,948 for one person or $115,640 for a family of four. A Hawaii housing planning study projects that 17,360 affordable housing units are needed by 2016 to meet the demand from residents earning 140 percent AMI or below.

In the northeastern U.S., cities with high-density populations are recognizing the unmet supply and high demand for affordable housing. New York City has implemented Housing New York: a Five Borough, Ten-Year Plan to address housing affordability; which seeks to create or preserve 200,000 units of high quality affordable housing. Martin Walsh, the mayor of Boston, has provided his administration’s long-term solutions for meeting the challenges of housing more than 700,000 residents that are projected to be living and working in Boston by 2030. Housing a Changing City: Boston 2030 outlines a plan for the city to create 53,000 new affordable housing units to handle the projected 20 percent increase in the number of new households.



PEMCO Realty. How Can We Make Housing More Affordable?

Northeast Real Estate Business. The New Face of Affordable Housing, August/ September 2015 issue. Housing Denver: A Five Year Plan.

The Denver Post. Denver looks to preserve existing affordable housing with new law

Atlanta Beltline. Atlanta Beltline Living Made Easier. Hawaii Housing Planning Study, 2011

Honolulu Civil Beat. Honolulu’s Affordable Housing Rules Only Produced 33 Units in FY 2014




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