When families have stable, decent, and affordable housing that they can afford, they are better able to maintain employment, perform better in school, and achieve better health and well-being.
But…
Researchers estimate that the United States has 3.8 million fewer homes than the American people need. The demand for housing exceeds supply in nearly every community and region of the country.
This is a problem! Every state and every community in the United States is impacted. Families have few options. Each year the shortage worsens; and that is why the number of homeless individuals is increasing.
Why aren’t cheaper homes being built?
The lack of new affordable housing in the U.S. is primarily due to a combination of factors, including:
• Zoning restrictions: most residential land in the U.S. is zoned only for single-family homes, limiting the construction of denser and more affordable multifamily housing options.
• High construction costs: the price of building materials and labor has risen significantly, making it more expensive to build new homes, especially smaller ones. Recent global events, such as the pandemic, have caused disruptions in the supply chain of building materials, leading to higher costs and delivery delays.
• Land costs: the price of land, particularly in desirable areas, has also increased significantly.
• “NIMBYism”: residents often oppose new developments in their neighborhoods, especially if they involve denser housing, further limiting construction options.
However, housing is key to reducing intergenerational poverty and increasing economic mobility. Research shows that increasing access to affordable housing is the most cost-effective strategy to reduce child poverty and enhance economic mobility in the United States.
Stanford economist Raj Chetty found that children who moved to neighborhoods with lower poverty saw their earnings as adults increase by approximately 31%, a higher likelihood of living in better neighborhoods as adults, and a lower probability of becoming single mothers. Additionally, children living in stable and affordable homes are more likely to thrive in school and have greater opportunities to learn both inside and outside the classroom.
Increasing access to affordable housing drives economic growth. Research shows that the shortage of affordable housing costs the American economy about $2 trillion a year in lower wages and productivity. Without affordable housing, families have limited opportunities to increase earnings, resulting in slower GDP growth.
In fact, researchers estimate that GDP growth between 1964 and 2009 would have been 13.5% higher if families had better access to affordable housing. This would have led to a $1.7 trillion increase in income, or $8,775 in additional wages per worker.
Moreover, every dollar invested in affordable housing boosts local economies by leveraging public and private resources to generate income — including earnings of residents and additional local tax revenue — and supports job creation and retention.
Source: National Low Income Housing Coalition