Affordable Housing Strategies


  1. Maintain Older Housing

On average, houses depreciate 1-3 percent annually, which is good news for affordability in communities with an abundant supply of older but still functional houses. In such areas, providing affordable housing may involve helping low-income households repair and weatherize their homes to keep them safe and reduce utility bills. This may require subsidies or low-interest loans.

  1. Government Subsidized Housing

Governments can sponsor and subsidize development of social housing to meet specific needs, such as seniors, people with disabilities, and low incomes.

often the only way to serve unmet housing needs, and governments are often able to coordinate and mobilize resources unavailable to private developers, but it tends to have relatively high costs due to the complexity of government administration, and can generally serve only a small portion of total affordable housing demands.

Increasing rent subsidies in a market with limited affordable housing supply may favor some groups (those that qualify for the subsidy) to the detriment of others, and can contribute to rent inflation. Only if increased subsidies are implemented with policies that increase housing supply can all lower-income households benefit.

  1.  Urban Fringe Development

Public policies can encourage development on inexpensive urban-fringe land. Using mass production building techniques, developers can produce large numbers of relatively cheap housing, but sprawled development tends to have high infrastructure development costs and imposes high future transportation costs on residents and communities.

Such housing can be a curse to lower-income households, if after moving to an automobile-dependent area they experience an economic shock, such as reduced incomes, a vehicle failure or crash, or fuel price spikes. This explains why sprawled areas tend to have higher foreclosure rates than more central, multi-modal locations: improving transport options increases economic resilience. 

  1. Affordable Housing Mandates ("Inclusionary Zoning")

Inclusionary zoning requires developers to sell or rent a portion (typically 10-20 percent) of the units they build at below-market prices. Like Robin Hood, it forces higher-income households to cross-subsidize their lower-income neighbors. If required of all development in an area these costs are partly capitalized into land values, minimizing the burden on individual developers. However, this strategy is only successful if new housing demand is very strong, if not, developers build fewer units, particularly moderate priced units, which can result in less total affordable housing supply.

  1. Reduce Infill Development Costs

Allow and support owners of existing urban properties to increase density, for example, by converting a garage or basement into a rentable suite, adding a story, or replacing single-family with multi-family housing. Since wood-frame construction tends to be cheapest, and elevators add significant costs, the most affordable housing tends to be low-rise (two- to five-story) townhouses and multi-family, although mid-rise (five- to ten-story), and high-rise (more than ten story) buildings may be relatively affordable where land prices are very high. The Missing Middle refers to a variety of low-rise housing types that are particularly suitable for urban infill.

This development strategy typically involves policy reforms that allow smaller parcel sizes and subdivisions, support condominium and cooperative ownership structures, allow higher densities and building heights, reduce minimum parking requirements, and streamline the building approval process.

This tends to be the most cost effective overall, because it minimizes infrastructure and future transport costs, including residents' vehicle expenses, and indirect costs such as road and parking infrastructure requirements, congestion, accidents and pollution. By providing more affordable transport options that residents can use if needed, such as if they lose their job or their car breaks down, this strategy increases economic security.