How Government Can Help with the Affordable Housing Crisis | ExactEstate

Affordable Housing

With skyrocketing rent and home prices, affordable housing remains a critical issue worldwide. Millions of individuals and families struggle to find decent, reasonably priced homes. 

Government intervention is crucial to creating sustainable solutions to this crisis. In this article, we’ll explore four ways that government initiatives can help alleviate the affordable housing crisis for both renters and homebuyers.  

1. Adjust Subsidies to Keep Pace with Rising Costs

According to the Government Accountability Office, subsidies have failed to keep pace with drastic increases in the cost of housing. This includes subsidies for both developers and renters/homebuyers.

• Developer Subsidies: Help offset the costs associated with building or renovating affordable housing units, making them more economically viable.
• Renter/Homebuyer Subsidies: Help offset the costs of renting or buying a home, and include rent subsidies, mortgage interest deductions, housing vouchers, and programs to help renters pay for affordable housing options.

The GAO wrote, “Land prices increased 60% from 2012-2019, and the cost of homes more than doubled from 1998 to 2021. But HUD doesn’t adjust spending limits for grant recipients’ activities to keep pace with these increased costs.” Exemplifying this situation, the Self-Help Homeownership Opportunity Program (SHOP), which subsidizes the construction of affordable homes, has seen a sharp decrease in output, falling steadily since 2004. 

HUD needs to acknowledge the skyrocketing costs of renting and homeownership by raising its subsidy threshold. In a 12-page report, the GAO explained how HUD can (and should) better analyze their data to make necessary increases to their spending for the SHOP program. The result would be a better-funded program that produces a greater supply of affordable housing.

2. Crack Down on the Incidence of Fraud in Affordable Housing 

In the mid-2000s, there was an uptick in the number of individuals facing eviction or other financial hardships. They resorted to falsifying W-2s and Social Security numbers to secure housing and other benefits, occasionally under circumstances in which they exceeded the income threshold to qualify for affordable housing, straining the already limited stock of homes. 

Falsifying documents, such as W-2s and SSNs, to qualify for affordable housing is a serious issue that undermines the integrity of assistance programs. This fraud unfairly impacts those in genuine need.

To address this, the government could:

• Implement robust verification processes, including cross-referencing income information with tax records and employment databases
• Enforce penalties for fraud to deter individuals from engaging in such activities
• Offer incentives for individuals to report suspected fraud, such as a percentage of recovered funds or protection against retaliation, which could encourage more people to come forward with information

3. Reduce Section 8 Discrimination by Increasing Landlord Education and Enforcing Compliance

Many tenants who secure Section 8 vouchers to help pay their rent will encounter difficulties thereafter. Landlord discrimination against would-be Section 8 tenants led a handful of states, including California and Colorado, to pass “source-of-income” anti-discrimination laws, which prohibited landlords from denying a tenant based on voucher income. While the law helped, it did not eradicate the problem. The Los Angeles Times reported that illegal Section 8 discrimination is still rampant. 

To combat weaknesses in the Section 8 voucher program, the government should enforce:

• Compulsory landlord-tenant education that does a better job of communicating the law so that smaller landlords are aware of their new responsibilities and tenants are aware of their rights 
• Proactive government review of rental listings to look for illegal language like “No Section 8”
• More Civil Rights Department/Housing Rights Initiative-sponsored testing wherein people are sent to pose as renters in L.A. and test whether landlords accept Section 8
• Increased enforcement when landlords are found discriminating and increase the speed of investigations into source-of-income complaints

4. Forward-Looking Regulatory Reforms 

Many U.S. housing policies are based on an 80-year-old housing model created, in large part, to accommodate the return of 12 million World War II veterans. Suburbanization and highway construction are among many WWII-era pushes that turned developers' attention away from urban and affordable housing. 

Experts agree that regulations are a key factor contributing to the disparity between housing supply and demand. These regulations burden the housing system with outdated land use restrictions, prolong development timelines, and impose excessive fees that further inflate already high prices. From environmental regulations to building codes, local zoning laws, and urban containment policies, each level of regulation governing housing production requires reassessment.

Potential regulatory reforms include:

• Inclusionary Zoning: Archaic zoning laws have restricted the development of multifamily and affordable housing options. If states mandate that a certain percentage of new developments are affordable for low- and moderate-income households, this can help create mixed-income communities that don’t work against affordable housing. 
• Guaranteed Basic Housing: Several prominent politicians have raised the question of whether housing is a human right. A guaranteed basic housing program could ensure that every individual has access to affordable and adequate housing, potentially reducing homelessness and housing insecurity.
• Vacant Property Taxes: Implementing a tax on vacant properties can incentivize property owners to put their properties to productive use, which may increase the supply of affordable housing.

• Financing Incentives: The government can establish financing and mortgage incentives to promote affordable housing, like enabling the securitization of loans for non-traditional homes, like modular dwellings. This approach, akin to the FHA program, can provide more flexibility in financing options for affordable housing, encouraging the use of innovative construction methods and expanding the availability of affordable homes.

Government initiatives are essential in addressing the affordable housing crisis. By providing financial support, enacting regulatory reforms, and re-evaluating their spending habits, the government can play a significant role in creating affordable housing options for all.

About ExactEstate

ExactEstate is a leading property management software provider helping property managers and landlords streamline and enhance their operations and increase efficiency. Our cloud-based platform offers features such as a resident portal, online applications, online payments, tenant screening, detailed and custom reporting, and a full accounting suite. We support our affordable housing, multi-family, and single-family rental clients with US-based customer service. For more information, please visit www.exactestate.com and follow us on LinkedIn.