As the country’s affordable housing crisis intensifies, exacerbating racial wealth gaps, it’s more critical than ever that federal policy help pave the way out of crisis and inequity. Mark Kudlowitz, LISC’s senior policy director, weighs in on the steps Congress can take to dismantle age-old, racially discriminatory barriers to plentiful, high-quality affordable housing and home ownership opportunities.
LISC is committed to furthering racial equity through our Project 10x initiative. Project 10x is laser focused on using LISC’s resources to upend the racial health, wealth, and opportunity gaps that keep millions of Americans from sharing in our country’s prosperity and realizing their personal potential. This holistic approach includes strategies to build wealth and equity for BIPOC families and seeks to lessen racial discrepancies in all facets of our work. Recent trends in the housing market though are exacerbating our nation’s racial inequities and require a commensurate federal response.
Our country’s affordable housing crisis has persisted for decades, with people living at the lowest end of the income spectrum feeling its impact most acutely. Even before the pandemic, our nation struggled to provide equitable homeownership opportunities for all people. Since the Great Recession, the gap between Black and White homeownership rates has grown wider than it’s been in more than 50 years. These discrepancies aggravate our nation’s growing wealth inequality, too. In recent years, these problems have intensified, in both the rental and homeownership markets, and BIPOC residents bear those burdens disproportionately.
On the homeownership side, recent research indicates that housing supply has reached its lowest levels in recorded history. The pronounced lack of available for-sale housing has contributed to large price increases, as demand outpaces supply. Home prices increased over 17 percent nationally and have doubled over the last decade, straining the ability of first-time homebuyers and BIPOC families to purchase a home. This is important since homeownership is the primary way that low- and moderate-income families are able to build wealth and achieve financial stability. Increasing opportunities for homeownership is a key component in combatting historically discriminatory policies that have precluded minorities and others from purchasing a home and widened the racial wealth gap.
The rental housing market is also troubled, as rent increases far outpace income gains. Rents are up a record 13.5 percent nationwide over the last year, with increases of more than 20 percent in certain metropolitan communities. These increases threaten the housing stability of many low-income renters, the majority of whom are BIPOC households. For instance, in 2019, 28 percent of white households were renters, compared with 58 percent of Black households and 54 percent of Latino households.
The causes of this growing affordable housing crisis are numerous, and include insufficient housing production, labor and supply cost increases exacerbated by the pandemic, zoning and local regulatory barriers that impede development, insufficient affordable housing development resources, among many other factors. It is estimated that our nation has built on average 150,000 fewer homes a year than needed, resulting in a 1.7 million home shortfall.
The solutions required to address this response need to be as comprehensive and wide ranging as the problem. LISC has published a set of federal housing policy priorities, and we continuously work with Congress and administration officials to advance them. We applaud the Administration for focusing on affordable housing supply issues and instructing federal agencies to do more. But to help remedy the deepening affordable housing crisis we ultimately need Congress to provide additional resources.
For rental housing, we need both supply- and demand-side solutions. Our nation desperately needs additional federal rental assistance to ensure underserved families are able to afford safe and decent housing. At the same time, we must build more affordable rental housing, which requires additional development resources for the Low-Income Housing Tax Credit (LIHTC) program, HOME Investment Partnership program, Capital Magnet Fund, and rural housing programs. Passing the LIHTC provisions in the Senate’s draft Build Back Better Act would result in almost one million units of affordable rental housing over the next decade.
On the affordable homeownership front, we have been working with our partners to continue to advocate for the Neighborhood Homes Investment Act (NHIA). The NHIA would provide a new tax credit to help build and rehabilitate more than 500,000 homes for low- and moderate-income homebuyers in underserved communities over the next ten years. The tax credit would cover the gap between the cost of building or renovating homes and the price at which they can be sold, thus making renovation and new home construction possible. Over 63 percent of the eligible areas are majority-minority communities, showing the program’s potential for creating homeownership opportunities for BIPOC families.
We also continue to work with our partners to advocate for down payment assistance resources that enable underserved families to achieve homeownership. Lastly, we’ve been working with state housing finance agencies as they make available almost $10 billion in Homeowner Assistance Fund resources to keep distressed homeowners stably housed and retain what is often their most important source of wealth. This is particularly crucial in light of promoting racial equity, as the majority of homeowners behind on their mortgage are Black and Hispanic and in communities of color.
At the local level, we need localities to reform zoning and regulatory barriers that artificially limit housing production and ultimately increase costs. An over-emphasis on single family housing, which has an exclusionary history linked to racial segregation, has prevented communities from building the full array of needed housing types such as multifamily developments. Some localities are changing such requirements to allow for multi-unit developments or accessory dwelling units, all of which LISC supports.
The tremendous housing needs of the current moment are daunting, but they provide an opportunity to push forward housing programs that are proven to meet those needs. LISC will continue to advocate forcefully for robust federal housing resources and to work with our local partners to ensure housing can be built. Without adequate housing resources, our nation will not be able to dismantle systemic barriers to racial equity.
Mark Kudlowitz, Senior Policy Director
Mark advocates for federal policies which support multiple LISC national programs, including: Affordable Housing, Rural Development, and Transit Oriented Development. Before LISC, Mark worked as the Policy Director of the U.S. Department of Housing and Urban Development’s Office of Multifamily Housing Programs and also worked for over seven years at the Community Development Financial Institutions Fund at the U.S. Department of the Treasury. Mark managed affordable housing and community development programs at the District of Columbia’s Department of Housing and Community Development and held multiple positions at the Housing Assistance Council, a national rural affordable housing organization. Mark earned his B.A. from the University of Florida and M.S.W. from the University of Michigan.