Addressing Housing Affordability: Two Opportunities
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Executive Summary

  • Rental housing in the United States, which accounts for over one-third of all housing, is now unaffordable for more than 20 million households.
  • The underlying cause of declining affordability is demand for housing that has outstripped net new supply, particularly over the past 15 years.
  • This presents an opportunity for private investors to help, by investing in regulated affordable rental units and by providing new market-rate rental housing.

More than one in four middle-income renter households spend more than 30% of their earnings on rent, as shown in Exhibit 1. Investors can help to reduce rent burdens with a two-pronged approach:

  • Preserving regulated affordable housing is a first-order approach, by matching residents with housing that is attainable when market-rate units are out of reach. This is essential to address today's needs.
  • Building market-rate rental housing is also critical. Every new unit of market-rate housing is occupied by a resident who otherwise would have rented an older, more affordable unit.

These solutions are presented as two-pronged, but they are not always or even usually exclusive. For example, many new market-rate rental multifamily communities include an affordable component, due to regulatory requirements or incentives. Affordability needs can be addressed by building both types.

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