Creating affordable housing
Strategy overview
- Creating more affordable housing stock: While local governments lack many of the tools that federal and state governments can deploy to create new affordable housing, they have a number of meaningful options at their disposal. These include legislation (like zoning reform), process incentives (like expedited permitting), and financial incentives (like tax abatements). Some communities may also facilitate the construction of more affordable housing through the establishment of community land trusts, strategic leveraging of land banks, or enabling housing construction on public land.
- Starting with zoning and land use reform: A major pillar of a local strategy to increase the availability of affordable housing is zoning reform. Without the ability to build denser housing, any local strategy to create new affordable homes will be limited in its effectiveness. In addition to zoning changes, procedural reforms like reducing or eliminating parking minimums, adapting building codes to enable more efficient construction, and expedited permitting can also be powerful enablers of increasing housing supply.
- Focusing on inclusive, higher-density zoning: In high-demand areas, inclusionary zoning policies can be an effective local strategy to increase the number of affordable homes. These policies require or encourage developers to dedicate a fixed share of new homes or apartments to households with low or moderate incomes. These policies may include supplemental incentives for developers, like density bonuses, and/or reduced or waived fees.
- Incentivizing affordable unit development: Jurisdictions can provide builders with significant financial incentives for projects that include affordable housing units. Such incentives can take the form of property tax exemptions or abatements, below market financing, and capital subsidies that can reduce financing needs that could slow progress.
- Investing in land for affordable homeownership: Another practice to increase supply is facilitating acquisitions of land for the construction of affordable homes. This may include using government-owned land and properties for the construction of new housing, partnering with community groups or nonprofits to launch a community land trust, or adding foreclosed properties to land banks.
Multiple research syntheses of affordable housing models demonstrate effectiveness; however, further rigorous, independent evaluations are necessary to confirm replicability of effects.
A 2022 research synthesis found that inclusionary zoning policies can increase access to quality, affordable housing for low- and moderate- income households; however, additional rigorous evaluation is necessary to confirm effects.
A 2022 research synthesis on community land trusts found that the strategy may be associated with a decrease in resident displacement and foreclosure and increases in housing stability; however, additional rigorous evaluation is necessary to confirm effects.
A 2022 research synthesis found that the Low Income Housing Tax Credit can increase access to quality, affordable housing for low-income households; however, additional rigorous evaluation is necessary to confirm effects.
Before making investments in this strategy, city and county leaders should ensure it addresses local needs.
The Urban Institute and Mathematica have developed indicator frameworks to help local leaders assess conditions related to upward mobility, identify barriers, and guide investments to address these challenges. These indicator frameworks can serve as a starting point for self-assessment, not as a comprehensive evaluation, and should be complemented by other forms of local knowledge.
The Urban Institute's Upward Mobility Framework identifies a set of key local conditions that shape communities’ ability to advance upward mobility and racial equity. Local leaders can use the Upward Mobility Framework to better understand the factors that improve upward mobility and prioritize areas of focus. Data reports for cities and counties can be created here.
Several indicators in the Upward Mobility Framework may be improved with investments in creating affordable housing. To measure these indicators and determine if investments in these interventions could help, examine the following:
Housing stability: Number and share of public-school children who are ever homeless during the school year. These data are collected by local public school districts.
Housing affordability: Ratio of affordable and available housing units to households with low, very low, and extremely low income levels. These data are available from the Census Bureau’s American Community Survey and the U.S. Department of Housing and Urban Development’s Local Income Bands.
Economic inclusion: Share of people experiencing poverty who live in high-poverty neighborhoods. These data are available in the Census Bureau’s American Community Survey.
Racial diversity:Index of people’s exposure to neighbors of different races and ethnicities. These data are available through the Census Bureau’s American Community Survey.
Mathematica's Education-to-Workforce (E-W) Indicator Framework helps local leaders identify the data that matter most in helping students and young adults succeed. Local leaders can use the E-W framework to better understand education and workforce conditions in their communities and to identify strategies that can improve outcomes in these areas.
Several indicators in the E-W Framework may be improved with investments in this strategy. To measure these indicators and determine if investments in this strategy could help, examine the following:
Access to affordable housing: Ratio of (1) the number of affordable housing units to (2) the number of households with low and very low incomes in an area (city or county). Housing units are defined as affordable if the monthly costs do not exceed 30 percent of a household’s income. Households with low incomes are defined as those earning below 80 percent of area median income (AMI), and very low-income households are defined as those earning below 50 percent of AMI.
Neighborhood racial diversity: Percentage of an individual’s neighbors who are members of other racial or ethnic groups, calculated as a Neighborhood Exposure Index.
Neighborhood economic diversity: Percentage of city or county residents experiencing poverty who live in a high-poverty neighborhood (defined as a neighborhood in which more than 40 percent of residents experience poverty).
- Design a long-term plan: Large-scale efforts to increase housing affordability often work backward from long-term, concrete goals, rather than being conducted on an ad hoc basis. A strong, cohesive plan typically requires significant resources, including dedicated government staff and investments in external support.
- Use supply as a lever for affordability: Shifting a market towards more affordable housing requires more housing supply overall. Incorporate both direct efforts to facilitate more affordable housing, like land banks and housing construction on public land, and a comprehensive suite of supply-side reforms that will allow for density (i.e. eliminating single-family zoning and parking requirements) and more rapid development (like expedited permitting).
- Solicit feedback from all stakeholders: At the beginning of a new housing planning process, launch a robust public engagement effort targeting two separate audiences: community members and developers. For residents, hosting public forums, conducting focus groups, and administering surveys to pinpoint community concerns can build trust and buy-in. These sessions launch the planning and design phase, and include a wide range of materials to help residents understand how their neighborhoods might change, including extensive use of visuals and 3D models. For developers, direct engagement through interviews and roundtables may help identify which types of interventions will most meaningfully change the status quo.
- Set concrete eligibility criteria: To ensure incentives are appropriately applied and to maximize new affordable units created, set and communicate clearly what qualifies as affordable housing, and what share of units must meet such criteria. Doing so can ensure developers appropriately apply for expedited permits, tax abatements, and other benefits reserved for projects that make significant progress toward increasing available affordable housing units. Similar clarity should be applied when putting new units on the market: jurisdictions should provide guidance on who is eligible and how to secure a newly available unit.
- Make a multi-pronged case for reform: Especially for changes that include legislation, frame increasing housing supply as a multidimensional issue with a range of benefits. This can include achieving goals in areas beyond housing affordability, such as racial equity, desegregation, regional economic development, and climate change.
Resources
Evidence-based examples
|
|
Outcome Area |
This ranking reflects how these approaches are scored in one of the major government- or philanthropy-led clearinghouse resources. For more: https://catalog.results4americ... |
|---|---|---|
|
Legal structure operated by a nonprofit organization that allows communities to control land and development projects
|
Stable and healthy families Supportive neighborhoods |
|
|
Local regulatory action shaping development, design, and built environment of communities and municipalities
|
Supportive neighborhoods |
|
|
Policies that encourage or require developers to dedicate a share of new housing units to low- or moderate-income households
|
Supportive neighborhoods Stable and healthy families |
|
|
Community-owned or public entities that acquire troubled properties and transform them into community assets
|
Supportive neighborhoods |
|
|
Land development approach merging distinct uses (commercial, residential, leisure) for greater density and diversity in a given geographical area
|
Supportive neighborhoods |
Evidence varies across specific models |