Housing Roundtable
As economic dynamism in America continues to shift the geography of economic opportunity, housing has become a top concern for a growing number of Americans. It’s clear that some areas are struggling to maintain or build enough housing to meet demand. With costs rising and preferences changing, we asked a group of experts for their thoughts on housing in America. The following text has been lightly edited for clarity.
Howard Husock, senior fellow in Domestic Policy Studies at the American Enterprise Institute (AEI) and author of “The Poor Side of Town: And Why We Need It” (Encounter Books, 2021). Learn more about Howard’s work here.
How would you describe the state of housing in America?
Although there is always room for improvement, particularly regarding costs, one must, from a historical perspective, take a positive view of American housing conditions. A century ago, it was not uncommon, especially in the South, for homes to lack indoor plumbing. In 1940, nearly half lacked it; by 1990, that was down to 1 percent. The lack of electricity in rural areas is also a thing of the past. The homeownership rate has, during the same period, risen dramatically, the result of federal initiatives. The average renter pays 30 percent of income in rent—higher than in the past but equivalent to what subsidized tenants pay. Overall, Americans spend 28.5 percent of income on housing. These are reasonable figures. The goal of the National Housing Act of 1937 was “safe and sanitary” housing—and that is almost universally the case today.
What are the most effective policy solutions to America’s housing challenges?
As it has been historically, more and varied home and home type construction is always needed, as older structures need replacement and preferences for housing type and geography change. Those goals suggest a variety of policy solutions: building codes that recognize new construction techniques as safe (if they are) and especially zoning change to make possible building what I describe as naturally-occurring affordable housing: small homes on small lots; that is, housing density. This should not mean only apartment construction near transit centers, as some have suggested, but zoning that permits a “variegated” stream of construction: attached single-family, two- and three-family homes that allow buyers to pay mortgages in part through rental income. Historically, in the pre-zoning era, these were common and a source of affordable housing. I like to celebrate the three-family houses of New England, row houses of Philadelphia, two-flats of Chicago, and bungalow in Oakland. We need modern-day equivalents—and need to permit them to be built.
Are you more optimistic or pessimistic about the future of housing in America? Why?
Overall, I am slightly optimistic. California’s statewide legislation permitting construction of accessory dwelling units is a step in the right direction. New York Governor Hochul’s proposal to push suburban counties to permit denser housing was as well—though she mishandled it politically and underestimated resistance that killed the idea. Similarly, Minneapolis took a step in the right direction by eliminating blanket single-family zoning, but failing to persuade suburban-style neighborhoods that would not be architecturally disrupted needlessly stoked resistance and court challenge. Suburban counties which are sensitively incentivizing somewhat denser construction (Washington County, Wisconsin) are showing the right path.
If you could change one thing about housing in America, what would it be?
Relax large-lot single family zoning by persuading local planning boards it can be in their interest to do so.
Emily Hamilton, Senior Research Fellow and Director of the Urbanity Project at the Mercatus Center at George Mason University. Her research focuses on urban economics and land-use policy. Follow Emily on Twitter @ebwhamilton or see more of her work here.
How would you describe the state of housing in America?
The affordability problems that were once primarily a challenge in a few coastal areas are increasingly affecting more growing metro regions across the whole country. As the exodus of people from the most constrained housing markets is meeting land use regulations that prevent housing from being built, prices and rents are rising from Boise to Raleigh. The share of U.S. households who rent has stayed quite steady—around one-third—since the 1960s, but the portion of income that renter households spend on rent has risen sharply. In 1980, the median renter households spent 20 percent of their income on rent, and in 2021, the median renter spent 25 percent. Since that’s the median, half of renters are spending more than one-quarter of their gross income on rent, often leaving them without enough money for other necessities.
In general, it is easier to get regulatory approvals to build new subdivisions of single-family houses at the outskirts of developed areas than it is to build new apartment buildings to allow more people to live in already built-out areas. But new financial regulations implemented during the Great Recession have made it more difficult for some households to qualify for mortgages, reducing this source of new supply as well. Amidst these headwinds for housing affordability, there are glimmers of hope on the policy front, which I discuss below.
What are the most effective policy solutions to America’s housing challenges?
Rules need to be changed to 1) legalize more, less expensive housing to be built, and 2) reduce the time it takes to secure permissions to build new housing. Most U.S. localities only allow multifamily housing, from duplexes to large apartment buildings, to be built on a tiny fraction of their land. Limiting development to detached single-family houses with large yards means that only the most expensive type of housing can be built in many places. Particularly when increasing demand for housing causes land values to rise, it’s important to allow housing to be built that economizes on land.
Most people can agree that housing affordability is important, and that we need more housing to be built in the places where Americans want to live. The difficulty comes in deciding where, precisely, to allow this housing to be built. Many people don’t want their own neighborhood or town to change for lots of understandable reasons. But this conservatism, repeated in place after place, is causing serious affordability problems. For this reason, I’m most enthusiastic about state-level laws that set limits on the extent to which localities can restrict housing construction.
Are you more optimistic or pessimistic about the future of housing in America? Why?
Overall, I’m optimistic that improvements will happen, but I think affordability will get worse in a lot of places before it gets better. Over the past several years, California has led the way with state-level rules that open up more opportunities for housing construction, from allowing homeowners to build backyard rental cottages to allowing multifamily construction in land zoned for commercial uses. Policymakers in states like Montana are taking steps to avoid becoming the next California. There, a package of housing bills is moving through the legislature. Some of these bills reflect important lessons learned on the West Coast about how state policies can successfully open up opportunities for more abundant housing.
At the local level, we’re also seeing many localities waking up to the benefits of allowing more people to live downtown, close to job centers. Increasingly, localities are reforming rules that prevent apartments from being built in urban cores, from parking requirements to zoning that would only allow office construction. Legalizing downtown revitalization with apartment construction is often a win for reducing blight, increasing property tax revenues, and allowing more people to live where they work.
There’s a case for pessimism as well, though. Some places that have desperately needed more, less-expensive housing for decades, like New York City, have seen recent failures to legalize housing at both the local and state levels.
If you could change one thing about housing in America, what would it be?
If I were queen for a day, I would overturn Euclid v. Ambler, the Supreme Court decision that upheld local zoning restrictions on residential density as constitutional. It’s un-American to allow local governments to prevent property owners from building housing on their land. The lower court justices saw things my way, and the Supreme Court’s decision was controversial at the time.
Andrew Rothgaber, Director of Public Sector at ICON, a construction technology company. Follow ICON on Twitter @ICON3DTech or learn more here.
How would you describe the state of housing in America?
“Crisis” is how I would describe the state of housing in America. We’re simply not building enough homes to keep up with population growth and the formation of new families and households. The figures vary across homes for rent and sale, and for single family and multifamily, but it is safe to say we are millions of units short of providing a basic human need: shelter.
The second way I would describe the state of the housing crisis is “pervasive.” It is affecting communities nearly everywhere. Local leaders in Monroe County, Florida, have told me they need workforce housing to support folks working in the service economy in Key West; rural communities in places like Brookings, South Dakota, are struggling to attract construction labor to build homes; and Indian Reservations across the country are suffering from depleting housing stocks and long waitlists for repairs and renovations.
Finally, the third way I would characterize the crisis is “stuck.” At ICON, we develop advanced construction technologies to help build homes faster, better, and more affordably. We recognize that technology is not a silver bullet, but we also believe that we cannot escape this crisis by continuing to build homes the way we have for the past hundred years. Some of the biggest homebuilders in the country have told us that power tools were the last meaningful technology brought to their industry. That was in the 1950s.
The problem is global. Since ICON unveiled the first, permitted 3D-printed home in the world in 2018, a humble 350 square foot unit, we’ve had over 60 heads of state reach out to ask how quickly we can get to their countries because they, too, are facing a housing crisis.
Climate change is compounding the challenges we face and laying bare that we have to build differently if we are to adapt and survive. Hurricanes consistently strike homes and communities along the Gulf Coast, resulting in displaced families and huge taxpayer expenditures to provide relief for disasters that we know are coming. The “wildland urban interface”, where human land development meets the wilderness, is one of the fastest growing land use types in the country and also one of the most prone to wildfires. We must build differently.
How is your company working to address America’s housing challenges?
We are driven by the question of how to house people more quickly in better and more resilient homes. ICON believes that construction-scale 3D printing is the most promising technology to address a dire need for a more sustainable solution to home construction, and to introduce greater efficiencies in speed and cost, all while yielding a higher quality and more resilient home from the ground up.
At ICON, we develop proprietary robotics, software, and advanced materials to reinvent the future of homebuilding. Our first 3D printer successfully printed the first permitted, 3D-printed home in March 2018 in partnership with nonprofit organization New Story. In March 2019, ICON unveiled its next generation 3D printer for homes, the Vulcan, and began using the technology for projects in the U.S. and in Mexico. To date, ICON has delivered dozens of 3D-printed homes and structures, with hundreds on the way across affordable housing, mainstream market residential housing, disaster relief housing, and military housing, as well as research and development with NASA to develop construction systems for the lunar surface.
The global housing crisis is an issue at scale, so the solution also has to be at scale. We recently announced a global architecture competition focused on affordable housing solutions, Initiative 99, where we are calling on the global architectural, design, and building community to come together with all the creativity, energy, passion, and focus to submit designs using our technology that can be built for under $99,000. The year-long competition offers a total prize purse of $1 million, and ICON has committed to building a selection of the winning designs at multiple locations to be announced in the future. We want to inspire and give hope to thousands of people that housing can be affordable, beautiful, resilient, and accessible all over the world. Please spread the word!
Are you more optimistic or pessimistic about the future of housing in America? Why?
I am optimistic. Automated construction technology has the power to completely change how we build in America. I invite all of you to visit the site north of Austin, Texas, where ICON is building a 100-home development in partnership with one of the biggest home builders in the country, Lennar, and co-designed by one of the world’s leading architects, BIG-Bjarke Ingels Group. There, a fleet of robots is building an entire community, and the homes will be sold beginning June 10 of this year. It is impossible to walk away from this job site without being transformed on some level. It feels like a trip to the future.
In the future, we believe neighborhoods, cities, and towns will be built by robots and drones, and this is a future that affords more beautiful, resilient, and safer homes for all that are also better for our planet.
As I mentioned above, we recognize that the housing crisis is a multifaceted issue and that technology addresses only part of the problem. But even on the policy front, I think there are reasons we can be optimistic. Housing is a bipartisan issue. We also see policy innovation coming out of places like the Texas General Land Office (GLO). To their great credit, the GLO created the Resilient Home Program to rebuild homes damaged by Hurricane Harvey with additional resiliency standards offered by alternative construction methods, including 3D printing. We need more programs like this.
Finally, I am optimistic that people will want the kinds of homes and neighborhoods that ICON and our likeminded collaborators are committed to building. I find the vision so persuasive that I am convinced it can even overcome entrenched opposition to new construction in localities around the country. People will embrace new construction if it’s diverse, dignified, and beautiful.
If you could change one thing about housing in America, what would it be?
I would love for the conversation about housing to be more hopeful, more exciting. We need to collectively feel a sense of responsibility for tackling this problem by envisioning the kind of world in which we want to live and then creating it. But it is hard to do so by asking people to fight for more of the same.
As housing practitioners, I think our role, whether it’s in housing policy, finance, or construction, is to experiment, innovate, and push the boundaries of how we provide shelter for people. Things must change. The opportunity to shape the future is something about which we should be excited.
At ICON, we are excited about the design possibilities that exist with 3D printing. Introducing more creative, divergent architecture that doesn’t cost more than traditional stick frame boxes can contribute to more interesting and beautiful communities, towns and cities, and in turn, create more equitable living environments. But we have to decide that this is something we care about, or it’s not going to get better.
Nicole Nabulsi Nosek, Chair, Texans for Reasonable Solutions. Follow Texans for Reasonable Solutions on Twitter @TXReasSolutions or learn more here.
How would you describe the state of housing in America?
Eight years ago, I was a paralegal making just below $50,000 and was barely surviving. Because of how expensive housing was, I was living in a small three-bedroom apartment, with a family living in one room, a young professional living in another room, and myself in the third bedroom. If I was making “decent” money as a paralegal and barely surviving, how are manufacturing workers, teachers, and firefighters surviving? The high cost of housing caused me to consistently stress out about my financial situation. Joining local organizations and going to city council meetings, I realized that our land use laws deterred the housing supply—driving up the housing prices to unbearable levels. While I am not struggling financially anymore, I hear housing concerns all the time from CEOs and founders who find themselves having to subsidize the cost of expensive housing when housing scarcity poses a problem.
After looking down the “rabbit hole” of housing, I realized the solution is so simple. With the recent influx of economic and population growth in Texas, it became ever more clear that the housing crisis of San Francisco and New York would follow Texas if we didn’t approach Texas with a more property rights, free market approach to building, which would benefit the missing middle and lower income like that of Houston.
In the coming years, we will see a divide where the cities and states that get ahead of their housing crisis problem will undeniably win. We have already seen migration flowing to the states, like Texas and Florida, that have reasonably priced housing. However, as these “population boom” cities and states start dealing with housing scarcity issues, if they don’t course correct with pro-building and pro-housing policies, I am confident we will see the same issues in New York and California follow these states. The state of housing in the US is bifurcated and to be determined—by the legislators’ and mayors’ willingness to create a political environment that allows new homes attainable for America’s working class. The model set out by Vail, Colorado, is ominous: Vail refused to build housing for its middle class. After a storm hit, residents needed medical attention, but the medical support staff weren’t able to commute because they all lived too far away during the dangerous weather.
What are the most effective policy solutions to America’s housing challenges?
We leave a huge portion of the affordability pie on the table if we ignore the immense impact from altering overly restrictive laws to allow market-rate builders and homeowners to add to the supply of homes. The fact is, market-rate developers have an incentive to build smaller lots, which cater to America’s working class. There is overwhelming data demonstrating an increase in housing supply of all kinds leads to a decrease in housing prices. In recent years, there has been a massive shift in accepting this combined approach: lower case ‘a’ and capital ‘A’ affordable housing is needed to impact housing prices at scale. We can do this by making it less onerous to build all types of housing. The restrictive laws standing in the way of both affordability developers and market-rate developers are the true enemy here.
Employers discuss moving headquarters to cities in Texas, but articulate their concerns about the housing prices. It is common knowledge that employers have to pay substantially more in salaries when housing is so expensive. Why would an employer move their headquarters to San Francisco when they could move it to Houston where housing prices are 280 percent less? Houston has economically benefited from their reasonable housing prices—due in no small part to their historic 1,400 square foot lot size ordinance. Despite Houston being the 4th most populous city in the nation, Houston is below the national average in terms of house prices—astounding for a major metro. Furthermore, their entry level and mid-level employees don’t struggle to live in Houston the way they do in San Francisco, where you need an average of $1.7 million to live “comfortably.” Legislators have been motivated to solve this problem so their districts benefit from employers relocating and bringing more jobs to their constituents.
Finally, what would Texas be without individual property rights? In that same vein, Texans should have the right to easily build an in-law unit to house their elderly father on their property or subdivide their own land into two lots to stash away some retirement savings, if they so wish. Every unit counts.
If you could change one thing about housing in America, what would it be?
More housing benefits everyone, from home-owners to future homeowners to renters. There is a term I learned from a housing economist: IGMFU (I’ve Got Mine F*** You). These are the folks who bought a house in the 1980s in Austin, Texas, for example, when the city’s population was in the 200,000s. A small portion of Austinites are comfortable with the status quo: their housing price increases from the high demand relative to supply, and they would prefer to benefit financially than make room for their kids or grandkids to buy a home in the future. What they don’t realize is allowing land to have different uses (duplexes, apartments, smaller lots, etc.) actually increases the price of their land because builders pay more knowing they can build more units and sell them. (Because smaller lots are allowed, the median home price overall declines—making room in the market for working Americans. NIMBYism is heavily based on false perceptions of their values decreasing, as demonstrated by the 2019 Minneapolis legalization of duplexes/ triplexes on land originally zoned for single family homes. In this study, the land value went up citywide after the upzone while rents decreased (Kuhlmann 2021).
Plainly put, I would change the inaccurate perception from anti-housing homeowners that their value would suffer as a result of new housing. The data demonstrates their value would go up while decreasing values per home.
Dr. C. Kat Grimsley, Visiting Scholar at the Housing Economics and Real Estate Sector Research Group at the University of Alicante and author of the NAIOP Development Approvals Index.
How would you describe the state of housing in America?
In one word: complex. Certainly, there is an overarching sense that we don’t have enough of the right type of housing at the right price in the right location. But correcting the inertia on the housing market is no simple task. Housing outcomes depend on a myriad of structural conditions such as local development policies, efficiency of zoning and construction approvals, environmental protections, the availability of debt and equity, and historic infrastructure, such as long-past zoning decisions, that shaped today’s built environment. But housing is also affected by consumer factors such as socio-economic status, expression of preference (to live or not live in a particular place, type, or size of housing), employment trends, and growth/anti-growth sentiments. A simple example of the interplay of some of these factors can be seen today in several western states: water scarcity dictates moratoriums on new housing development, but this limits the supply of housing stock and results in cost increase as demand to live in these areas continues to grow. From the perspective of existing homeowners, a restriction on new housing is a positive outcome as their equity builds and leaves them relatively better off. However, from the perspective of renters, first time purchasers, or those at economic risk, this is a disastrous dynamic. Further complicating the situation is a lack of effective development control, which allows construction to continue under certain policy loopholes, but which ultimately jeopardizes consumers who find themselves without reliable water resources.
What are the most effective policy solutions to America’s housing challenges?
We have several different policy solutions that work to varying degrees depending on jurisdiction and local political climate; some of the more well recognized are density bonuses, inclusionary zoning requirements, tax increment financing districts (TIFs), permission for accessory dwelling units (ADU), and the use of local government land for affordable housing. Certainly, we also have tax policies related to write offs for homeownership. For better or worse, most of these policies are related to the creation of new housing, and each has its legitimate benefits and criticisms. However, most of these policies represent efforts by the government to regulate or incentivize private actors, typically homebuilders and apartment/condo developers, in order to produce desired outcomes. Philosophically, this is a different starting point than that which many other countries use to approach housing markets, and that leaves plenty of room to innovate new policy solutions in America.
Are you more optimistic or pessimistic about the future of housing in America? Why?
It depends on the stakeholder group in question. For middle class Americans broadly, the housing struggle will continue, but will also continue to evolve. As we’ve already seen in recent years, this will likely lead to a solution through changes in preferences: people will learn that they can live in smaller spaces or move to more affordable secondary markets. New rental and ownership models of housing are already being developed to accommodate these changes. I’m more pessimistic about the future of housing for those at economic risk, for whom the spectrum of choices may be more limited.
If you could change one thing about housing in America, what would it be?
I would love to see an evolution in the complexity of the discussion. Housing is a significant expense for most families; however, focusing on the supply and cost of housing in isolation will not produce a complete remedy because there are several external factors that affect the relative affordability of housing. Simple examples of these include reductions in workforce participation, structural or cultural barriers to career advancement, failure of salaries to keep up with increased costs of living, the increasing cost and need to care for aging parents, and the relative cost of other necessities, such as medical insurance, which continue to grow disproportionately. These and many other interwoven variables all affect the amount of income available for housing. That said, if I could pick one housing-specific related change, I would hope to see a reduction in the time and cost to construct new housing and mixed-use projects through the reduction in policies and procedural barriers to approvals. I recognize there is a necessary balance in this space, and the government has a legitimate oversight role to play in development. But zoning and development approvals can be delayed for years while the government and citizen groups ask for redesigns and scrutinize non-material details—all of which adds significant delay and cost to the project, which ultimately gets passed through in the cost of the resulting housing.
