Housing Strategy Explained

The U.S. housing affordability crisis is a complex, human-made problem. Its solution must be equally complex. There is no singular solution to our housing issues. Policies that may work in one city might not work in another. Also, many policies bring about unintended consequences that need to be addressed by packaging additional policies together.

There are dozens of policies that cities across the country could implement to address their housing affordability issues. It is not necessary to implement all of them, however, an effective, well-rounded strategy typically incorporates a 3-pronged approach.

You may know them as the three p’s of housing (protect tenants, preserve communities, and produce housing ), but for the purposes of this website, I will be using the three s’s of housing developed by Professor Shane Phillips in his book titled The Affordable City. The three s’s - Supply, Subsidy, and Stability - are defined as:

Supply - policies that lead to the development of more housing. Examples of supply policies include: Density Bonuses[1], Upzoning[2], Urban Growth Boundary increases[3], permitting Accessory Dwelling Units for affordable housing use[4], permitting Manufactured Homes[5], and raising Housing Trust Fund revenues[6].

Subsidy - aid (usually monetary) given to low-income tenants to pay for renting out units that they otherwise would not be able to afford to live in. Examples of subsidy policies include: Direct Rental Assistance[7], offering Subsidies for Affordable Housing[8], and the Low Income Housing Tax Credit[9].

Stability - tenant protections from evictions and preservation/upkeep of rental housing units. Examples of stability policies include: Just-cause Evictions[10], Right to Counsel in Eviction Court[11], Rent Control[12], and buying Naturally Occurring Affordable Housing[13].

* For a more comprehensive list of housing policies broken down by the three s’s, please visit Prof. Phillips' blog post about his book titled The Affordable City.

* For the most comprehensive list of housing policies currently implemented in the U.S., please visit https://localhousingsolutions.org/housing-policy-library/

Here is why this simultaneous, three-pronged approach is so important:

We need a bigger supply of housing. The simple law of supply and demand tells us that if there is more demand for a commodity then there is available supply, the price of that commodity is likely to increase. Simply put, housing is unaffordable in many cities because we do not have enough available housing. Even if we had a home for every household in the U.S., the cost of such housing would be out of reach for many families. Having a healthy vacancy rate (which I’ll define as a surplus of housing combined with no homelessness or housing insecurity) means that landlords would be willing to charge less to fill up their units, ensuring that the buying power is in the tenants’ hands. If not done carefully, supply-side policies can also lead to higher rates of displacement.

So can we just focus on supply-side policies only? -- no! It typically takes several years to approve and ultimately finish housing construction which means that the immediate need for housing would not be met.

So how about addressing the immediate need. Can we focus on subsidy policies only? -- once again, no! While subsidy policies address the immediate need by ensuring that people can afford their rental units, these policies simultaneously increase the demand for housing (now that more people can afford to rent units at a higher price). This increase in demand for housing allows landlords the flexibility to raise their rents and have tenants compete for higher-cost units. Subsidy policies also ultimately transfer government monies to landlords.

What about ensuring that people can remain in their homes. Can we just focus on stability measures only? -- aren’t you tired of hearing me say no? Stability eliminates the displacement concerns I raised in the supply-side explanation above. While it ensures that people renting their homes can stay in their homes and that these units remain affordable, it does not enable current (subsidy policies) or future (supply policies) tenants find and secure affordable housing as is accomplished with the other two policy avenues.

So, how about that 3-pronged approach? Each of the three s’s - supply, subsidy, and stability - has its strengths and weaknesses. Combined, they form a comprehensive approach that counterbalances current needs, future needs, and solutions to the root causes of housing unaffordability. In creating their housing strategy, municipalities should aim to make each of the three s’s a priority.

Policy Definitions:

[1] - Density Bonuses: Allowing a developer to build more units on a site than they otherwise would be permitted based on zoning codes if the developer committs to providing a set number of affordable housing units. For more information, please visit https://localhousingsolutions.org/housing-policy-library/density-bonuses/

[2] - Upzoning: Changing zoning codes to allow for higher residential density. For more information, please visit https://localhousingsolutions.org/housing-policy-library/zoning-changes-to-allow-for-higher-residential-density/

[3] - Urban Growth Boundary: Urban Growth Boundary is a tool designed to control urban sprawl. Areas that fall within the boundary are dedicated for urban developement and those outside the boundary are to be preserved (i.e. for agriculture). For more information, please visit https://localhousingsolutions.org/housing-policy-library/increases-in-the-supply-of-buildable-land-by-expanding-growth-boundaries/

[4] - Accessory Dwelling Units (ADU): Smaller, independent residential units placed on the same lot of a single-family home. There are several different types of ADUs including detached (separate from the house), attached (connected to the house but still its own unit), internal (a room from the primary house - i.e. basement, converted garage, etc. converted to an ADU). For more information, please visit https://localhousingsolutions.org/housing-policy-library/accessory-dwelling-units/ and planning.org/knowledgebase/accessorydwellings/

[5] - Manufactured Homes: Prefabricated housing, typically made in factories, that serve as mobile homes. For more information, please visit https://housingmatters.urban.org/articles/how-manufactured-housing-can-fill-affordable-housing-gaps

[6] - Housing Trust Fund: Funds dedicated to affordable housing. These are typically established state, county, or city governments and are comprised of multiple funding revenues. For more information, please visit https://housingtrustfundproject.org/ and https://localhousingsolutions.org/housing-policy-library/housing-trust-funds/

[7] - Direct Rental Assistance: Funding given to tenants to pay for a portion of their rental costs. For more information, please visit https://localhousingsolutions.org/housing-policy-library/state-or-local-funded-tenant-based-rental-assistance/

[8] - Subsidies for Affordable Housing: Annual payments given to affordable housing landlords to offset the costs of continuing to operate affordable housing. For more information, please visit https://localhousingsolutions.org/housing-policy-library/operating-subsidies-for-affordable-housing-developments/

[9] - Low Income Housing Tax Credit (LIHTC): The federal government's LIHTC program provides tax credits for the development of affordable housing. To date, this program has led to more development of subsized housing in the U.S. than any other program. Though this is a federal program, state governments bear some influence over the ways in which it runs (i.e. the Qualified Allocation Plan and local governments can work to advocate for certain changes in the Qualified Allocation Plan). For more information, please visit https://localhousingsolutions.org/housing-policy-library/low-income-housing-tax-credit/ and https://www.huduser.gov/portal/datasets/lihtc.html

[10] - Just-cause Evictions:In many jurisdictions, landlords are allowed to evict their tenants with their own discretion. Just-cause evictions are a form of tenant protections that clearly define what is and is not a permissible reason for evicting a tenant. For more information, please visit https://localhousingsolutions.org/housing-policy-library/just-cause-eviction-policies/ and https://allincities.org/node/50226

[11] - Right to Counsel in Eviction Court: Tenants have a legal right to defend themselves against eviction in Housing Court. However, not every jurisdiction or state allows for the legal right to have a lawyer representing the tenant. Low-income tenants typically do not have the financial means to afford a lawyer in Eviction Court, hence many go to court without representation. A legal Right to Counsel ensures that tenants are given legal representation in Eviction Court even if they are unable to afford one on their own. Having legal representation in Eviction Court increases the chances that the tenant might win their case and avoid eviction. For more information, please visit https://www.aclu.org/news/racial-justice/tenants-right-to-counsel-is-critical-to-fight-mass-evictions-and-advance-race-equity-during-the-pandemic-and-beyond/

[12] - Rent Control: Legally capping the annual percent increase in rental costs that landloards are allowed to charge. Rent control is typically only applied to units that are occupied by tenants; lifting this rent stabilization policy once a unit becomes vacant. Vacancy control keeps the same rent control regulation even after a unit becomes vacant. Some cities have experimented with vacancy control, but the topic itself is not yet highly studied. For more information, please visit https://localhousingsolutions.org/housing-policy-library/rent-regulation/ and The Affordable City by Shane Phillips

[13] - Naturally Occurring Affordable Housing (NOAH): Housing developments that remain affordable in their housing market even though they are not subsidized by any government program.. For more information, please visit https://noahimpactfund.com/impact-investing-affordable-housing-minnesota/what-is-noah/