Affordability

Solving America’s Housing Crisis: Fixing Broken Markets and Broken Incomes

06. 10. 2026 • Becky Chao, Mike Konczal, Ned Resnikoff

A summary of Building Affordability: The Policy Agenda for America's Housing Crisis

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The Problem

Housing is central to the affordability crisis squeezing Americans nationwide. Housing costs have skyrocketed since 2000, with inflation-adjusted rents rising more than 20% and home prices up roughly 65%. Over 21 million households, which represent nearly half of all renters, spend more than 30% of their income on housing. Young Americans are bearing the worst of it, with half of all voters under 30 reporting housing as their top financial concern – more than every other expense combined. 

Broken markets and broken incomes are why housing is unaffordable for most Americans. Broken markets halt the development of new housing, while broken incomes have fallen short of rising costs, pushing existing housing out of reach for families. A policy agenda that seeks to solve the housing crisis must address both. 

We need to build more homes, and we need to make sure Americans can afford them. While no single policy will solve this independently, we can increase housing supply through incentives and innovation to fix broken markets, and strengthen tenant protections and expand cash assistance for renters to supplement broken incomes and help families make ends meet.  

We recommend the following approaches to curtail America’s housing affordability crisis:

Fixing Broken Markets

1. Reform Land Use

End Exclusionary Zoning: The federal government should incentivize states and localities to reform restrictive zoning codes like single-family-only mandates, excessive parking requirements, and low height limits that artificially cap housing supply and drive up costs. Congress should go further than the 21st Century ROAD to Housing Act by tying incentives to measurable improvements in housing affordability.

• The blueprint in action: Adding housing supply helps lower-income renters. After Austin, Texas enacted sustained zoning reform from 2015 to 2024, it added 120,000 units (a 30% increase), and rents in older, non-luxury buildings fell roughly 11%, the steepest decline of any large U.S. metro.

Update Building Codes: Outdated building codes raise construction costs without improving safety or accessibility. For example, American developers typically pay more than three times as much for elevator installations compared to peers in Europe who permit smaller, cheaper elevators, producing fewer small, accessible apartment buildings as a result. Reforming codes based on international best practices and evidence can lower costs and unlock more family-sized housing.

2. Expand Housing Public Options

Build Social Housing: A new federal Social Housing Finance Agency could be a public sector alternative to private equity by investing in and acquiring affordable housing developments in high-demand markets. Unlike traditional public housing authorities, it would operate through a revolving loan fund, issuing low-interest construction loans, acquiring land and completed properties, and partnering with property managers. Another non-mutually exclusive option is to allow existing public agencies to ground lease property they own for affordable development. 

• The blueprint in action: Montgomery County, Maryland’s Housing Production Fund shows that  social housing works: as of early 2026, the fund had more than 2,600 units in its production pipeline, and cities like Atlanta and Chattanooga are now starting similar programs. Northern California’s Bay Area Rapid Transit system has facilitated 4,232 units of housing on land it owns near rail stations.

Repeal the Faircloth Amendment: A 1998 federal law effectively caps public housing at 1999 levels, halting new construction that uses Department of Housing and Urban Development funds. Congress should repeal it. There are currently only 35 affordable units available for every 100 extremely low-income families who rent. Investing in current public housing stock and building more public housing outside of high poverty areas are necessary to tackle the housing crisis.

3. Embrace Industrial Policy

Invest in Housing Innovation: Productivity in the construction industry has stagnated for decades, keeping costs high and limiting how much can be built. Congress should authorize a new office within HUD to offer loans to companies working on novel and experimental multifamily housing construction techniques and technologies, like more efficient factory-built housing and mass timber construction. 

Reform Federal Housing Finance: High financing costs can stall projects underway and limit future building, but adapting government programs and institutions can ease financing constraints.The Federal Home Loan Bank (FHLB) System is estimated to hold a $7 billion annual implicit federal guarantee, yet does little to incentivize housing production. Congress should require a share of FHLB lending flow directly to multifamily construction, particularly for so-called “missing middle” housing like townhouses, duplexes, and courtyard apartments that fall into a financing dead zone. Streamlining FHA’s 221(d)(4) construction program and expanding Fannie Mae and Freddie Mac’s role in construction lending would unlock additional production at minimal fiscal cost.

• The blueprint in action: Internationally, dedicated public housing finance institutions in France, Germany, Canada, and the United Kingdom have sustained high levels of housing production over long periods. Locally, MassHousing’s Bringing Innovation to Lending and Development (BILD) program shows how public financing tools can reduce construction-period risk through rate locks and gap financing. 

Fixing Broken Incomes

4. Enhance Cash and Cash-Like Support

Expand Direct Cash Assistance: Even if we fully close the housing supply gap, many Americans still cannot afford the housing that exists. The federal government should modernize the housing choice voucher program by giving eligible households the option to receive a universal cash grant, and mandate that the program be fully funded annually. Right now, only about 25% of eligible households currently receive federal rental assistance. Creating a direct cash program with mandatory funding would reach families currently left out. Households that are homeless or severely rent-burdened should also receive a supplemental cash benefit.

• The blueprint in action: A Philadelphia trial found that direct cash rental assistance significantly reduced both homelessness and forced moves. Nationally, the federal government’s COVID-era emergency rental assistance program helped over 3 million renters stay housed.

Improve the Low Income Housing Tax Credit (LIHTC): The Low Income Housing Tax Credit is the largest source of new construction funding for affordable housing, helping build or rehab nearly 4 million units since 1987. Congress should increase LIHTC funding, expand eligible project types to include mixed-income developments that can cross-subsidize affordable units, and streamline burdensome income verification requirements that prevent tenants and property managers from reaping the benefits of the program. 

5. Strengthen and Enforce Tenant Protections

Stabilize Rents for Older Properties: Rent stabilization should apply to all rental units over 15 years old, capping annual increases while exempting new construction entirely. This protects existing tenants from displacement during housing price shocks without discouraging new housing production, because developers typically look at  revenue modeling for an initial ten-year period when considering investments. 

• The blueprint in action: California’s Tenant Protection Act of 2019 capped rent increases at either 5% plus inflation or 10% (whichever is lower). This protected renters during the extreme price shocks during the COVID-19 pandemic without suppressing new construction.

Prevent Evictions Without Just Cause: In many states, landlords can evict tenants without explanation. Just cause eviction protections limit the legal grounds for eviction to non-discriminatory and non-predatory causes, protecting tenants from unfair evictions with cascading economic consequences. After an eviction, tenants’ annual earnings decrease by roughly $1,300 in the first year and $2,400 in the second. As of 2025, only 10 states have just cause protections. The federal government should develop model state legislation and incentivize adoption.

The Bottom Line

America’s housing crisis didn’t happen overnight, and it won’t be fixed with a singular solution. We must address broken markets and broken incomes in tandem to achieve broader, swifter, and more effective pro-housing policy. Building more housing and protecting renters are not competing priorities.They are complementary. Supply-side reform makes tenant protections and rental assistance work better. Stronger income support means more people can actually access new housing when it is built.These pillars are foundational to creating pathways to affordable housing.

Housing challenges are location specific. Policymakers should adapt these policy ideas to meet their communities’ specific needs, taking what works, building on what exists, and prioritizing interventions that will have the greatest impact where they govern.

The solutions exist. The question is whether we have the political will to deploy them.