By Andreas Scocos and Katya Spear, Mayors Innovation Project
Throughout the US there is a significant housing shortage – estimated by some housing experts to exceed 4 million units – driving up housing costs as an increasing number of buyers and renters compete for a relatively static number of housing units. While the shortage is especially acute in cities like San Francisco and Boston, where industry growth – tech, for example – has led to massive migration, it isn’t limited to coastal cities. In 2023, a historic 42.9 million households nationally (33% of total US households) were cost burdened (spending more than 30% of household income on housing).
This housing shortage is rooted in the 2008 financial crisis and exacerbated by industry growth, supply chain shocks, and the low post-COVID unemployment rate. These trends have combined to create robust economic growth in cities but made it increasingly difficult for people to afford to live there, often driving long-term residents out of neighborhoods as rents, driven by tax assessments, rise due to gentrification. On top of all of this, stringent zoning laws have made it difficult for developers to construct anything but single-family homes in many neighborhoods.
As a result, rents have increased and home values have skyrocketed as demand for housing vastly outpaces its construction, burning through city residents paychecks, driving homelessness, and reshaping constituents’ access to goods and services. Cities must increase the supply of housing to meet demand and protect long-term residents at risk of being priced out.
The increase in US tariffs on building materials, coupled with more stringent immigration enforcement, bring new challenges and uncertainty to the housing market. Despite this, there are innovations happening across the country to support diverse, affordable, and accessible housing. Here, we explore a few and share some critical, municipal focused resources on housing.
Set goals, use data, track progress
The City of Knoxville, TN set a goal of investing $5M per year to its Affordable Housing Fund, and has exceeded its goal each year, having invested $40M since 2019. Knoxville developed a housing data dashboard that tracks and displays housing trends to inform the public and policy makers about housing needs and programs to address them. Madison, WI recently launched its own housing dashboard tracking overall housing production and progress relative to its established goal of adding 15,000 new homes by 2030.
In Louisville, KY, as in many cities across the US, the challenge isn’t necessarily that the city lacks housing development, but that the development happening isn’t affordable for lower income residents, disproportionately impacting communities of color. In 2023, the City launched a first of its kind Anti Displacement Tool designed to stop public financing from going to housing projects that displace local residents.
Zoning
One way to combat the housing shortage is to stimulate higher density housing by amending zoning laws. Minneapolis led on zoning reform through the Minneapolis 2040 Plan, adopted in 2019, which eliminated parking minimums for all new construction by 2021, established incentives for developers to advance high density projects on commercial corridors, allowed duplex and triplex construction on all city lots, and established height minimums in high use areas. The plan also unzoned transit and corridor districts to stimulate taller, more dense development. These changes have had a significant impact on the housing market in Minneapolis, where housing construction increased 12% from 2017-2022, and overall housing cost increased by 1% during that period. This contrasts with the state of Minnesota in which housing construction went up 4% and overall housing cost increased by 14% over the same period. Similar comprehensive zoning reform has passed more recently in Boise (ID) and Chattanooga (TN).
The City of Madison, WI, passed a zoning amendment to allow cooperative housing in all areas of the city, creating affordable housing options in high-income, low-affordability neighborhoods, and increasing housing diversity. This effort is coupled with a 2023 zoning change to expand the definition of “family,” removing the requirement that family members be related by blood, marriage, or adoption, and allowing up to five unrelated individuals to live together regardless if they are renters or homeowners. This adjustment is intended to improve equity, increase housing choice, and end the disproportionate negative impact of past practice on communities of color and low income communities.
Building rehabilitation and adaptive reuse
In many cities, significant portions of housing stock is dilapidated or vacant. Renovation and rehabilitation of properties is often cheaper than tearing down existing housing stock to build new housing. Thus, cities across the country are utilizing grant and forgivable loan programs to stimulate rehabilitation of existing buildings.
Waterloo, IA city maintains a forgivable loan program available to residents who have lived in their property for at least one year, with loans forgiven after five years of residency in that property. This program helps low to moderate income residents continue to afford their homes by granting them loans to rehabilitate structural issues that the cost of which would have otherwise forced them from their homes.
Lansing, MI’s Walter French Adaptive Reuse project will convert a former junior high into 76 apartments at or below 80% AMI, with 17 units for those experiencing homelessness. The building is convenient to transit and will include first floor childcare and social services.
Pre-Approved Housing Plans and accelerating housing diversity
Pre-Approved housing plans are designs that have been preemptively approved and reviewed by municipal planning and permitting departments. This approach can speed up the building timeline while reducing costs and increasing opportunities for smaller housing developers. These projects focus mostly on missing middle housing construction and infill development in city neighborhoods, but can also be approved for new development on vacant land and new neighborhood construction.
In Papillion, NE, a development on previously vacant land is being developed with a pre-approved housing plan, designed to create an affordable, walkable, mixed use, community. Salt Lake City (UT), South Bend (IN), and Spokane (WA) are three cities using pre-approved plans to expand Accessory Dwelling Unit (ADU) development. Amherst, NY is piloting an ADU forgivable grant program to accelerate ADU development, providing grants of up to $125,000 in assistance and technical support for ADU permitting, design and construction.
Housing is the conversation right now – at the local, state, and federal level, though surely being felt most acutely in our cities, villages, and towns. To dig in, here are some new resources from friends and national partners:
The National Housing Crisis Task Force is a newly launched coalition of bipartisan state, local, and policy leaders that aim to identify and scale the most promising innovations in housing production and preservation. In March, they released their first set of recommended tools, which cover things from right sizing tax incentives to land use reform.
Strong Towns just released “The Housing-Ready City: A Toolkit for Local Code Reform,” which presents six code reforms that local officials can implement today with the authority they already have to alleviate the housing crisis.
Members, please reach out if you’re interested in exploring a particular tool or policy lever with us, and consider joining us in Albuquerque, NM this summer, where we’ll explore a closely related topic of addressing housing and homelessness.