Ideas to Improve Affordable Housing in the Nation

Real estate has always been a trending topic in every major city in the United States of America. The problem of building affordable housing units for low income communities in the country is being taken into serious consideration by the government, which is also why HUD training webinars are specifically focusing on countering the same as of late. Housing webinars with the correct knowledge, combined with effective policies can be the perfect solution to bridge the housing gap for the underprivileged.

A Financial Stress on Every Family

It doesn’t come as a surprise that housing costs are rising faster than incomes, which puts families under great financial stress. According to stats from 2017, almost half of the renter households were spending more than 30 percent of their income on rent, which goes on to meet HUD’s definition of being cost-burdened.

Although there have been problems with affordable housing for a while now, in recent years, even middle-income households are facing different challenges, especially in areas with strong job markets. The place families can afford to live have strong implications for their daily life.

As results from research go, children who grow up in high-opportunity communities have better economic outputs once they grow up. Problems arise when areas and neighborhoods that have strong labor markets along with good education aka places that are in high demand don’t build enough new housing, which only makes things worse for the affordability scenario.

The reason behind that is housing near jobs is generally expensive, which further pushes low and middle-income individuals to be forced towards cheaper housing societies, right on the outskirts of metropolitan areas. All of this increases the time and money spent on traveling.

How Better Alignment Can Help?

Let’s explore how housing policy tools can help: allowing smaller and more compact housing via the regulation of reforming land, increment in taxes for underused and expensive land, and the expansion of housing subsidies for lower-income households.

Value of Land Tax

The removal of barriers to developing apartments can ultimately lead to increased housing units in expensive areas with time. Although the same could happen in a faster and in a more equitable manner, provided that the efforts are combined with higher land taxes.

This concept comes way back from the 19th century when it was proposed by Henry George to ensure that wealthy homeowners could not limit the supply of homes artificially. As opposed to property taxes that charge the same rate for both land and structures, taxes force wealthy landowners to build more extensively, courtesy of the higher rate on land and lower tax rate on structures.

The only concern about applying such reforms is that they allow higher-density development at the cost of increasing the value of the property, which somewhat becomes a gain for the existing property owners.

Another concern with up zoning is that it could encourage landowners to delay development since they await the opportunity to build denser and larger buildings. This feature in particular for land value is pretty attractive, especially in locations where investments have been made by the local government to increase land values via different practices.

Land value taxes combined with up zoning can drastically change incentives for owners of large single-family units in expensive areas. Further, it can lead to higher tax bills. Land near city centers, job clusters, and transportation nodes is expensive in general. Land value taxes can change the financial incentives of the owners for expensive land with low-density structures. This can further encourage more people to live near work which reduces commuting time.

Increased Housing Subsidies

With time, building smaller houses can bring down housing costs or can at least keep them from rising rapidly. But doing all that isn’t enough to help low-income families. In accordance with the guidelines provided in HUD webinars, it has been stated that no family with a median income of around $20,000 should have to spend more than $500 on rent every month. And the only way to bridge the gap between incomes and low-cost housing is via public subsidies.

Financial stress can be reduced for low-income families, courtesy of the federal government via the expansion of housing subsidies via the use of national housing trust funds or vouchers. In other areas, increasing the minimum wage or supplementing income earned via earned income tax credit can help poor families to pay the rent.

In a nutshell, the problem of housing affordability has become an urgent concern in recent years. Chances are that these practices can help, but they can also backfire at times. Real estate areas where the market is on the rise can prompt the redevelopment of older and low-density apartments into new and larger apartments that are outside the reach of existing renters.

The expansion of housing vouchers for covering more families can therefore help protect low-income renters from the problem of displacement.

Reforms for Zoning

By this time, the citizens know that the nation needs to build more housing units and make sure that it isn’t expensive, especially when it comes to high-end communities. For the completion of the same, the responsibility falls on the shoulders of the local government to reduce regulatory barriers that affect and limit the ability of the market to build small and affordable homes on expensive land.

Let us better help you understand with an example. The local zoning regulations restrict building anything other than single-family detached houses on three-quarters of land for most of the cities in the country. Building duplexes, townhouses, and apart buildings are illegal.

Even on the rare occasion when building multifamily buildings is allowed, complex zoning laws such as minimum lot sizes and building height caps along with other factors ultimately limit the financial feasibility of developing housing units.

On top of all this, single-family houses occupy more land than any other housing type. This is the reason why in places where land is expensive, the multiple-home building is the best possible way to reduce costs since it spreads the cost of land across multiple homes.

The solution to this can be considered by redeveloping low-density older buildings with high-density new buildings, since it is efficient and pretty common in expensive cities, apart from the richest neighborhoods where homeowners make use of their political and financial resources to block a majority of the new housing.

Zoning reforms can significantly increase the supply of housing since they open up the affected neighborhoods to duplexes, townhomes, and even small apartment buildings. All this is done while ensuring that the end product is accessible to many more families.

In simpler terms, the only way to make progress with the problem of affordable housing is through cooperation from federal, state, and local governments as well.