Understanding the housing affordability crisis

[00:00:12]

ELENA RENKEN: Hi, everyone, and welcome to SciLine’s media briefing on housing affordability in the United States. My name’s Elena Renkin, and I’m SciLine’s journalism projects editor. Covering housing affordability is a constant challenge as policies and markets change, but the issue is in the spotlight even more than usual with this fall’s elections approaching and candidates suggesting plans.

Today, we’re going to talk about the drivers behind housing costs, challenges buyers are facing, and what research has revealed about the impacts of zoning rules, fair housing laws, and other policies. We’ll also touch on how some housing cost dynamics have changed over time and how today’s housing landscape affects sustainability goals. Now if SciLine is new to you, we are an editorially independent nonprofit that’s based at the American Association for the Advancement of Science. We’re funded by philanthropies, and all our services for journalists are free.

Our mission is to make it as easy as possible for reporters to use scientific evidence and expertise in stories you’re already covering on all kinds of topics. Maybe that’s a story with a clear science angle like new measles outbreaks, or maybe it’s a story where the scientific angle isn’t as obvious like voting by mail or high gas prices, but where scientific research can still answer crucial questions. More of our resources are available on sciline.org, including a collection of reporting guides and other resources related to election issues.

And if you’re looking for a scientist’s expertise on a story you’re covering now, you can click the blue I Need an Expert button on our site, and we will search for a source who’s available to answer your questions before your deadline. Before we start, I’m going to give each of our expert panelists here a moment to introduce themselves. Minjee Kim, would you go ahead?

[00:02:02]

MINJEE KIM: Hi, Elena. Thank you for that intro, my name is Minjee Kim. I am an assistant professor at UCLA’s urban planning department. My research area is at this intersection of land use regulation and real estate development. And along those lines, my previous papers, I’ve looked at how up zoning, changes in zoning regulations affect housing production and affordability.

And I’ve also been teaching a course on exclusionary zoning and the legacies of exclusionary zoning and what planners and policymakers today can do about it. It’s a course called Zoning for Equity. So those are my connections to this panel. I’m looking forward to joining and participating.

[00:02:51]

ELENA RENKEN: Thank you so much. And Jung Choi.

[00:02:55]

JUNG HYUN CHOI: Thank you. Hello, everyone. My name is Jung Choi. I’m a principal research associate at the Housing Finance Policy Center in the Urban Institute. I do a lot of research around the housing finance market, mainly focusing on accessing and sustaining home ownership. And I did a lot of work around young adults facing challenges, accessing the current home buying market, as many of you might already be experiencing in your own life, but I’m happy to talk more about it and looking forward to our conversation today.

[00:03:32]

ELENA RENKEN: Thank you. And Brad Greenburg.

[00:03:35]

BRAD GREENBURG: Thanks, Elena. I’m Brad Greenburg. I’m the executive director of the NYU Furman Center, which is an interdisciplinary academic research center based at NYU. It’s joint of NYU’s Law School, NYU’s Wagner Graduate School of Public Service. We focus on housing policy, land use policy. I teach a course on land use housing and community development in New York City. I come from a background around public housing and the voucher program, which is where I worked as an attorney for a number of years. Yes. Thanks, Elena.

[00:04:08]

ELENA RENKEN: Thank you all for taking the time today. I’m going to start by asking each of our panelists here a few questions before we take questions from the audience. So journalists, you can submit those questions at any time during the briefing. Just click the Q&A icon at the bottom of your Zoom screen. And please do let us know if you’d like your question directed to a specific panelist. The recording of this briefing is going to be up on our website later today and a transcript will be added in the next couple of days. With that, I will get started. Minjee, my first question for you is, what are the different kinds of zoning and how do these impact housing costs?

[00:04:45]

MINJEE KIM: Well, thank you, Elena, for the question. I would imagine that we’re interested in regulations that drive up the cost of housing, and I would categorize them into two different buckets. So one that is intentionally exclusionary and then the ones that are less intentional but have the effect of driving up the cost of housing. So the types of zoning, and also when I’m referring to zoning here, it’s not strictly zoning ordinance. There are building codes and safety codes that are related.

So I’m referring to all of those regulations that might drive up the cost of housing. So on the intentional regulations side, obviously, we have the traditional exclusionary zoning practices such as having large minimum lot sizes, having large minimum floor area, having very restrictive density, only allowing single family housing units. Those are some of the most common culprits that drive up the cost of housing, but less prominent ones are ban on mobile home parks, not having land zoned for multifamily housing types, having restrictive dimensional regulations such as setback and minimum lot or maximum lot coverage and height limitations.

And obviously, there’s also parking restrictions, regulations that could be cost prohibitive. And then on the other side, there are unintentional regulations that might drive up the cost of housing, and a couple of the ones that come to my mind are ones that are related to safety issues. So there’s one about having double staircases for buildings above certain height and reducing that double staircase requirement to a single staircase has been one of the reforms that are taking place here in California.

And then relatedly, the California legislature is currently considering revising their condo defect liability law that has proven to drive up the cost of condo units. So those are two and I could expand on what the details of these regulations are, but those are some of the different kinds of zoning regulations that affect housing costs.

ELENA RENKEN: And how should reporters think about the relationship between housing supply and climate or sustainability planning goals?

[00:07:27]

MINJEE KIM: And this became even more prominent of an issue as L.A. experienced the 2025 wildfire. But in this question of where should we build, is it housing production versus climate change and resiliency? And these two goals actually go hand in hand, in my view. The more that you build in already developed denser neighborhoods, the less resource you’ll be consuming on the outskirts and the WUI communities that are more prone to wildfires in the case of wildfires or flood prone areas.

And you’re also reducing the cost of commuting and consuming in a more environmentally-sustainable way. So the more that we can densify existing urban areas, the goal of housing supply and production and the sustainability and climate resiliency will be furthered simultaneously.

[00:08:39]

ELENA RENKEN: Thank you. And that WUI is the wildland urban interface, have I got that right?

[00:08:43]

MINJEE KIM: Yes. That is correct.

[00:08:44]

ELENA RENKEN: Thank you. And what reforms, zoning or others, have been shown to improve access to housing as opposed to others that are less useful?

[00:08:54]

MINJEE KIM: So there have been and are still ongoing, a lot of efforts to reform zoning, both at the local level and also at the state level. And research does show that increasing density and allowing for more denser types of housing, denser types of housing in single family districts which is commonly referred to as the practice of up zoning has proven mixed results, and that really depends on how the up zoning initiative is designed.

So for example, in New Zealand, where the entire city and the region was up zoned, it has proven to have brought down the cost of housing and increased housing production. Whereas, one of my research papers on New York City looks at neighborhood specific up zoning and the result of neighborhood-specific intervention and increasing density seems to almost move the problem around within the city as opposed to solving housing affordability crisis in a more regional manner.

So those are two different types of zoning, up zoning and zoning reform, that have had differing results. There are also examples of zoning reforms that have been ineffective just because there are too many strings attached. So too many conditions to meet or if the process of taking advantage of zoning reform or new zoning regulation is too complicated, then that will tend to be ineffective. So an example that I have in mind is from Seattle where the city did up zone, but then attached affordability requirement, required affordable housing in the up zoned areas.

And the research, a research paper demonstrated that developers are just building outside of those up zoned areas to avoid that affordability requirement. So that’s an example of an unintended consequence and ineffective zoning reform. There are smaller scale zoning reform and interventions that have proven to be pretty effective. So one that comes to my mind is Portland’s residential in fill program, and there are research that have shown that this program has helped to bring down the cost of housing and more housing production.

San Diego’s ADU, Accessory Dwelling Unit reforms have been very effective as well, and Berkeley’s Terner Center have published a couple of papers and blog posts about the efficacy of the ADU reforms.

And here in L.A., the Transit Oriented Communities program, which granted additional density and also allow affordable housing projects to be approved by right, meaning without any discretionary review process and public hearing have been also effective in promoting construction of affordable multifamily housing in L.A. So those are some of the ones that have shown to be effective.

[00:12:26]

ELENA RENKEN: Thank you. Those are really interesting points of comparison for reporters. And what are the equity implications of zoning?

[00:12:35]

MINJEE KIM: And this is the class that I’ve been focusing on for the past seven years or so. So zoning from its get go, zoning from its very birth was intended to be exclusionary. And so even prior to zoning, there were land use regulation practices that were intentionally racially biased and discriminatory.

So in the 1800s, San Francisco had a land use regulation, local ordinance that would ban laundries from certain parts of the city, and that was targeted to discriminate against Chinese immigrants that were operating those laundries. And then, in 1910, Baltimore introduced the first racial zoning, which was outlawed in 1917, but those are the legacies of zoning that really played and still plays into effect.

And going back to the equity implications of zoning. And then in 1926, in the US Supreme Court case, Euclid versus Ambler, the U.S. Supreme Court essentially upheld the very idea that multifamily housing units should be a buffer between hazardous industrial uses and single family only zoning districts, and setting up that hierarchy of single family districts being the prioritized neighborhood that should be protected, and then multifamily housing types being the inferior types of housing.

And that still continues to be the case in today’s zoning practice that multifamily uses are being used as buffer against quieter, more family-oriented neighborhoods versus the industrial and commercial districts. And also past planning and zoning practices, even nowadays, have continuously zoned historically-marginalized communities as higher density, more mixed uses as opposed to the practice of protecting single family detached housing type.

So that still continues to be the case and the reforms that we are discussing today, some of them have intentional equity impact in mind, whereas others are more just focused on housing production. And I do think that the more that we could highlight and focus on the equity implications, the more we can get to the exclusionary legacies of zoning regulations.

ELENA RENKEN: Thank you. And let’s move on to you, Jung. To start off, how much less likely are younger adults today to own homes compared with previous generations of the same age?

[00:15:46]

JUNG HYUN CHOI: Great. Thank you for the question. Great question to start the conversation. So I want to first mention about the definition of the home ownership rate. So the traditional homeownership rate is calculated at the household level. So it’s the total number of households who own a home divided by the total number of households. So right now, that number for young adults aged between 25 and 34 is around 40%, and that number is about seven percentage point lower than the number we had 20 years ago.

But however, that doesn’t capture the full landscape because as you know, many of the young adults right now are delaying household formation. So they are less likely to move out of the parents’ home and homes at an earlier age and form their independent households. So that is actually leading the homeownership rate to drive down further if we calculate homeownership rate at the individual level.

So if you calculate the home ownership rate at the individual level, so that is the total number of individual home owners who are head or spouse of the home, divided by total number of individuals who are aged between 25 and 34. That number currently is 29%. So the individual level home ownership rate is 29%, and the household level is 40%. So there is a significant gap between the two.

And also, if we compare that with the 22,005 numbers 20 years ago, at the individual level, we had about 40% of individual owners. So that drop is about 11 percentage points. So we actually see a greater drop of individual homeownership rate compared to the household level homeownership rate because of the fact that young adults are not moving out of their parents’ home.

[00:17:47]

ELENA RENKEN: And what’s a first generation home buyer, and why does that distinction matter for policies?

[00:17:52]

JUNG HYUN CHOI: Yes, the first generation home buyers. So most of the policy programs that target home buyers is at the first time home buyers. So they are the people who enter into home ownership for the first time in their lives. But the first generation home buyers are first time home buyers who also don’t have a home-owning parent. And this is very important because many of the research, including ours, show that having a home-owning parent really helps the young adults to enter into home ownership earlier in their lives.

So we did a research previously showing that even after controlling for a host of other factors that affect your likelihood of becoming a homeowner, if you have home-owning parents, you actually are seven to eight percentage points more likely to be homeowner compared to very similar individuals that the parents do not own a home. So especially in this market where housing has become more and more unaffordable, a lot of young adults are relying on their parents’ piggy bank to access home ownership.

So we are actually seeing greater disparities between those who can access home ownership through parental support and those who don’t have that financial support. So for policymaking, there has been in the prior administration, there was actually a federal bill that provided a targeted downpayment assistance program to first generation homebuyer.

Unfortunately, that didn’t go through. But since then, there has been a lot of local programs that have started to initiate, like first generation downpayment assistance program and first generation rate buy down program, especially in this high interest rate to lower the interest rate of those young adults who don’t have those parental wealth to rely on on existing home ownership.

[00:19:52]

ELENA RENKEN: How does that parental wealth and homeownership status shape a young adult’s own path to home ownership?

[00:19:59]

JUNG HYUN CHOI: Yes, that’s a great question. So what we are seeing is that if you have home-owning parents, you are more likely to enter into home ownership earlier on in life. And a lot of our research shows that the time that you buy your first home really has a long-term implication on your future wealth. So those young adults who have access to home ownership before age 35 have significantly higher wealth at the age near retirement because they can benefit from house price appreciation and they have more time to pay back their mortgage debt.

So right now, the fact that there is greater disparity in accessing home ownership among the younger adults, depending on the family wealth status, I think will have a long-term implication on their future wealth. And we’re also seeing some differences across the market. So in more unaffordable markets, that is where young adults are more likely to stay with their parents. And even if they move out of the parents’ home, they are less likely to start off as an owner and start off as a renter. So there is also disparities across markets on when young adults can enter into the home ownership space.

[00:21:18]

ELENA RENKEN: Thank you. What are the biggest obstacles keeping those younger buyers out of the market?

[00:21:24]

JUNG HYUN CHOI: So that’s a great question. So we did a host of research on this topic, and then when I first joined Urban about eight years ago, there was also a huge discussion on, maybe millennials are not interested in home ownership anymore, their difference in preferences. They want to live in a hip urban area and stay as renters. But then many of our studies and also studies by other organizations, including the Fed show that it’s not the shift in preference.

They were coming out of the great recession when the labor market was very unstable. And then back then the access to homeownership also became more difficult because the credit market tightened. But then as soon as the labor market recovered, we actually saw between 2019 and 2022 that many young adults started to purchase homes, and that was when the media was also focusing on, okay, millennials are finally back to the market. Unfortunately, that trend didn’t last long. It only lasts about three years. And once the rates started to increase up again, we’re seeing another wave of delay in moving out of the parents and also delay in home ownership.

So right now, I think both the high rate and elevated home prices is really preventing young adults to start their own households and also purchase homes.

[00:22:49]

ELENA RENKEN: It’s really helpful to add to the big picture. Thank you. How do renting versus buying dynamics differ today compared with a generation ago?

[00:22:59]

JUNG HYUN CHOI: That’s a great question. I think it’s like renting versus buying. I mean, it also became more, right now, very expensive to purchase a home. So a lot of younger adults stay as renters for a long time. But then the thing is the rent prices also went up, so it’s becoming more challenging for saving up for future down payment after paying for your rent prices. And what we’re also seeing in the market right now is greater wealth gap between homeowners and renters, because if you also think about it, the financial market has been doing very, very well.

But then a lot of the renters, after paying for their rent, don’t have any savings left to invest in the stock market. So in the most recent data, we actually saw that the gap between homeowners’ wealth and renters’ wealth have reached historic high. So that’s one thing. And as I mentioned before, it’s not just about deciding between home owning and renting, young adults are delaying household formation because of this rise in both the rental and the home ownership cost.

And when we first did the research, I was thinking, “Maybe they don’t have to pay for monthly housing costs if they stay with the parents for a longer period of time.” So maybe these adults, after decades after, they could jump start into home ownership. So we did a study that follows the same individual over time.

And what we found is that if you stay with your parents between age 25 and 34, rather than renting or owning a home and moving out earlier, you’re less likely to become a homeowner ten years after compared to those who moved out of the parents’ homes more earlier in life. So this, again, has a long term implication on when you purchase a home and further, how much wealth you will generate in your age near retirement.

[00:24:59]

ELENA RENKEN: Thank you for all that helpful context. And I will turn to you, Brad. My first question is what are the primary federal affordable housing programs in the U.S. today, and how do they differ in design and target populations?

[00:25:15]

BRAD GREENBURG: Sure, so I’m going to put aside the home ownership and mortgage programs. We obviously originate a lot of mortgages with the federal government and use mortgage insurance, and I have a mortgage interest deduction that’s very active in the homeownership context, but the affordable housing programs the federal government run really fit into three categories.

One is rental assistance. So the housing choice voucher program, project based rental assistance, those are programs that are providing rental assistance to tenants and landlords, usually through a PHA, a public housing authority, to support low-income renters who are trying to rent generally on the private market. The other program we have is the public housing program, which is a place based program where the government is operating the housing and gets an operating subsidy and a capital subsidy from the federal government.

And then we also, programs that are targeted at new supply. So the biggest is the low-income housing tax credit, which provides investors tax savings if they invest in affordable housing construction. And that flows from the federal government through states and localities. And then the third category is homeless assistance. So we have programs that give grants to homeless services providers around the country as well that come from the federal government.

We also have block grants that can do all those things. Some of them, it’s usually CDBG or HOME money. Sometimes it goes to new construction. Sometimes it goes to rental assistance, sometimes it goes to staffing. But people also use those block grant programs for all three categories. And they’re all very essential to local housing budgets.

[00:26:57]

ELENA RENKEN: Very good to know. Thank you. How widespread is eviction in the U.S.? And what policy interventions have shown the most promise in preventing displacement?

[00:27:08]

BRAD GREENBURG: Sure. So eviction is relatively common among low-income communities. It’s about three million folks, I think about three million eviction filings every year in the United States, a little bit less than that, usually. I’ll say evictions have fluctuated recently. We had an eviction moratorium during COVID. Some states had different timelines from when they lifted their moratorium, but around 2021, 2022, they started to lift those moratoria, and filings have started to climb back up to pre-pandemic levels in the last couple of years.

But most evictions, the vast majority of filings, are for nonpayment of rent. Which typically means it’s low-income households who don’t pay rent for a month or two and have a filing against them. So in terms of intervention, the second part of your question, the big thing folks have been experimenting with is, can they deliver rental assistance to folks ahead of a filing? So in the past, that’s been in the form of emergency rental assistance, like a one time, one shot payment to pay off arrears.

Other folks have tried vouchers, so can I give someone a voucher for long-term rental assistance if I know they’re going to be consistently unable to pay the rent? But that’s been intervention that folks have been trying. The other type of filing that you can have against you for eviction is called a holdover proceeding in most jurisdictions, which is where you violate some other term of the lease.

So maybe you broke a house rule or caused damage to a unit, and someone proceeds against you for that reason. It’s harder to have interventions for those types of holdover proceedings. One thing we’ve tried in New York City is called the right to counsel, which is where you get access to an attorney in housing court, for every tenant. And so we fund housing court attorneys, but in general, a challenging place for intervention, and has been consistent in its results, producing fewer filings and fewer warrants.

[00:29:11]

ELENA RENKEN: What reforms to the housing voucher program have been most promising and what obstacles have slowed things down?

[00:29:19]

BRAD GREENBURG: So this depends on what issue you have with the housing voucher program that you’re trying to solve. I’ll say in markets like this in New York City where it’s a really tight market and there’s not very many units, it’s really hard to utilize your voucher, so you might get the voucher and go out on the private market and try to find an apartment and you can’t find one. And in other places, it’s something different. I’d say the most common things over the last few years that people are trying with vouchers, one is project basing a voucher, which really means that you take the voucher and you assign it to a particular building.

And that’s because it’s been a really good method for adding new supply and rehabilitating existing units because it’s a long-term ongoing subsidy that you’re getting with the voucher, and you can leverage that for an investment in the building. And the good thing about it is when you project based the voucher, it also means that someone’s going to be able to use the voucher at that place that you’re project basing it. So you have more new supply and you also have a guarantee that someone’s going to be able to utilize the assistance.

So HUD has been letting a lot of jurisdictions increase the number of vouchers that you can project base. So now you can take your budget allocation as a locality and project base more of them. And that’s been a very popular reform in a lot of places to add supply for those folks.

The other reform we’ve studied at the Furman Center is where you have spatial differences and what you use as a payment standard. So for every voucher, the public housing authority is saying, “I’m going to pay this amount to the landlord.” Which is usually based on a fair market rent in the area.

And it’s assigned to the entire metro area, and HUD has let folks experiment with different fair market rents and payment standards for the voucher in different places. And this has been because they want folks to have more mobility with the voucher, so they want to be able to give people more money to go to a high opportunity neighborhood and also pay less in some of the lower opportunity neighborhoods and see if they can incentivize people to move with their voucher into higher opportunity neighborhoods.

We did a paper on it. It’s actually surprisingly relatively budget neutral and it can be pretty effective, but takeup has been difficult because of all the PHAs facing shortfall on other financial challenges in the last couple of years. But that’s been a reform people have been trying too. I’ll throw a couple other reforms out there. But one is housing navigation services.

So in really tight market, sometimes people will give a voucher, a broker or a person who can help them find an apartment faster and utilize their voucher. Folks have also been experimenting with inspections. You have to do an inspection ahead of the voucher being utilized, and people have been experimenting with how they can change the inspection protocols and still deliver a habitable unit. So there’s been a lot of folks trying to figure out ways to make the voucher easier to use and better.

[00:32:31]

ELENA RENKEN: Those local dynamics and pain points are good places to look for local story ideas for reporters. Thank you.

[00:32:37]

BRAD GREENBURG: For sure.

[00:32:39]

ELENA RENKEN: What role does fair housing law play in shaping how affordable housing is placed and who it serves?

[00:32:46]

BRAD GREENBURG: This is such a hard question, Elena, because fair housing has been going through, as administration federal administrations change, it goes through different approaches. So what I would talk about is we had an obligation in the Obama administration and something called Affirmatively Furthering Fair Housing, which was a rulemaking that required localities to think about where they would place their affordable housing dollars and use fair housing criteria and then plan for that and submit it to the federal government.

And then in the first Trump administration it got rolled back, and it got put back in place in a different format in the Biden years, and now it’s been rolled back again by the Trump folks. But technically, it’s a rulemaking that’s supposed to not just prohibit discrimination, but also require places using federal housing dollars to think about how they’re placing different properties in different places and utilizing those dollars and whether it’s advancing integration.

But it’s been going back and forth. So I’d say these days, fair housing law is not being used to encourage that. We have found in the past huge amounts of concentration of voucher utilization and construction of new affordable housing in predominantly Black and Hispanic neighborhoods and a lot less production in wealthier and whiter districts, especially in New York City. So it’s still an issue where there’s production happening in certain communities and not in others. But I would say, the federal government’s use of fair housing law is pretty sparse these days to try to fix that.

[00:34:27]

ELENA RENKEN: Got it. Thank you. And how has federal housing policy broadly addressed or maybe failed to address racial segregation in housing?

[00:34:37]

BRAD GREENBURG: Yes, so, like Dr. Kim said, this is a long legacy. So I mean, segregation came out of homeownership policy in the ’30s and ’40s. So they were always very segregated programs. Public housing started as a very segregated program. They would build some projects for Black Americans and some for white Americans, and they were separate, even in northern cities.

So it’s always been like an element to federal housing policy. I wouldn’t say that there’s any focus these days on trying to undo that in a big way. We tend to still see higher levels of segregation associated with lower mobility, and we’ll also see differences in homeownership rates among Black and white populations. The Housing Choice Voucher Program is still predominantly a program used by Black and Hispanic households, like a public housing program. So I’m not sure that they’re addressing it, but it’s still a component of the federal programs for sure.

[00:35:44]

ELENA RENKEN: Very good to know. Thank you. And thank you all so much. I’ll now start asking questions to all our experts, and to reporters on the line, please submit your questions using the Q&A box found at the bottom of your Zoom screen. First off, a question for all of you. What important aspect of the housing affordability story is often overlooked? Minjee.

[00:36:08]

MINJEE KIM: So from my perspective, I think there’s two different aspects that are overlooked. And first being the development industry’s ecosystem not being ready to take up and run with the housing production we would like to see. The housing production development industry in and of itself, the developers, the financiers, the builders, the contractors, we don’t have nearly as thick resource and talent in the ecosystem to be able to really ramp up the housing production, even if there’s all of these regulatory barriers are removed, even if we have more funding.

I do think that there needs to be more emphasis on building up capacity within the development industry of all types of housing production. And right now, it’s just either single family detached housing or multifamily apartments that are 150 and above units. And then there’s very little within the development industry that can build somewhere in between across the board too, even for single family, detached housing type and multifamily apartments, we just don’t have enough talent pool for greater housing production.

So that’s definitely one thing that I would highlight that we don’t discuss as much. The other aspect from my perspective is the role of the federal government and the role of, well, state, not meaning state governments, but the role of the government in actually producing and promoting housing production. If we think about the public housing era and not that I’m advocating that we go back to that mode of operation, but the federal government was very involved in actually buying land and developing housing in partnership with the private sector.

And that’s what the types of housing that we see elsewhere in the world, that the government is a lot more involved in actually building and managing and operating lower income and affordable housing options, and we just don’t see that at all.

Nowadays, it’s more subsidies given to the private sector to produce more housing. But I do think that we can re emphasize the immense role that the governments of all levels can actually play in more direct way for housing production.

[00:38:59]

ELENA RENKEN: And Jung?

[00:38:59]

JUNG HYUN CHOI: Yes, I would just first start with seconding what Minjee said because we also hear, especially in the rural area, there is greater lack of developer capacity. So there’s also regional disparities in how much housing production can actually happen even with funding and less regulations. And also, I think there needs to be more discussion on not only building new housing, but also repairing and renovating housing, and it’s the median home age in the U.S. is around 42. And a lot of people are living in homes that need a lot of repair and renovation.

But then the renovation financing, it is very, very challenging. So most of it, we see that over 75% of people actually renovate with their cash, so because they can’t rely on the financial system to provide adequate capital to do those projects. One other thing I want to quickly mention related to what I have said is that the median, first time home buyer age is not the thing that really matters. I know that the age 40 has been really a mega hit on a lot of news reports. I saw that everywhere.

But that is based on a very small survey, about 6,000 respondents and of whom about 1,300 are first-time home buyers. But if you look at a lot of administrative data for mortgage applications and credit bureau data, we actually see that first-time home buyer age has stayed relatively stable. The median is around 32 and 33 in the past decade. Then people tell me, “Okay, it’s stable, so our young adults not struggling to become homeowners, what the media and a lot of other stories are telling us.” Well, that’s not true because median is just the middle age of a person who’s buying a home.

So, for example, if five people bought a home this year, and the person in the middle, that person’s age was 33. The median age is 33. If there are three people bought a home and the median is 32, next year, the median falls to 32. But then the actual home buyer actually dropped by 40%, and that is what we’re seeing in the current market. So in 2024, among young adults who are aged below 45, we see a 10% decrease in the home purchase activity compared to 2018 and a 26% decline in home purchase activity compared to 2021. So although median has stayed relatively stable, the number of young adults who can access home ownership has significantly declined in the more recent years.

[00:41:58]

ELENA RENKEN: Very good to know, thank you, that that 40-year-old statistic there might not be the most representative one. And, Brad?

[00:42:09]

BRAD GREENBURG: Yes, I would say there’s two things that folks would pay attention to. One is operating costs and the operating environment. A lot of owners and homeowners, owners of rental housing and homeowners are facing, where you have fuel costs going up, insurance is this escalating cost over time. Some of it’s due to climate risk, but other risks as well, and a lot of owners are dealing with that. And the other thing, my second point is that tax policy really matters.

So both federal tax policy and local property tax policy has a huge impact on housing, and that you shouldn’t lose track of those things. And the reason I say this about operating costs and tax is because some owners are setting their rents based on market dynamic, and some owners are setting rents based on the need to sustain what’s called net operating income, which is to have enough income coming in the door from rents relative to their costs. And they can’t capitalize things or borrow money if they don’t show that they are above water.

And likewise, homeowners also struggle to do things like renovations if they don’t have enough income to cover their costs. So as costs have been escalating so rapidly in this period of inflation and continue to escalate, sometimes these costs are far above inflation actually that are facing housing owners, the rate of inflation.

They’re really struggling and they’re getting squeezed, and the income side is not covering it, in part because, especially for low income folks in a lot of markets, their income in real terms has been declining, so they can’t afford higher rents, and on the other side of the ledger, owners have escalating costs, and there’s this squeeze happening to a lot of operators of housing that folks should pay attention to.

And it’s also the reason I say tax is a part of this is it’s one of the reasons you see a lot of these property tax revolts and other efforts to roll back property taxes is because people are looking for that as a relief valve from some of what they’re facing. Yes, that’d be the, I think, thing I would flag.

ELENA RENKEN: I have a question here from the New Jersey Monitor. With the upcoming midterms, what kinds of policies should federal lawmakers or challengers looking to replace them pursue to make housing more affordable, especially in notoriously pricey states like New Jersey? Anything you see national lawmakers now pushing that is either helping or hurting states’ housing affordability? Is anyone able to weigh in on that one?

[00:44:46]

BRAD GREENBURG: I think what I just said is really important. So if interest rates keep going up and operating costs keep escalating, housing is unaffordable. So I guess the main thing to do would be to try to address those issues. I don’t know that I see a lot of action trying to address those issues, but that would be what I would say is most impactful to keep rents and home ownership costs down means bringing interest rates back down and trying to also bring some of the other costs of ownership and operating of housing down to make it more affordable.

And on the other side of the ledger, bringing incomes up. So if people don’t have enough income to support their housing consumption, it makes it unaffordable. Sometimes you can supplement that with vouchers and rental assistance, but only to a point.

[00:45:37]

MINJEE KIM: Yes. Well, I would say that if you ask the development industry and developers, the one thing that they would say is more money. So more appropriation for housing production, development, pre development cost, subsidies of that sort would go a long way, as opposed to removing regulatory barriers could go only so far. So direct appropriation would be the most directly impactful policies in terms of housing construction.

[00:46:16]

JUNG HYUN CHOI: Yes, I would agree and disagree with that a little bit because I think the cost of building has gone up so much. So what we’re seeing in the market was, with the same amount of money, it’s just less, you can build less. So we’re seeing from the data that you need more money, but the capital costs went up because of the rate increase, the cost of material and labor, they’re all gone up significantly. So even with greater funding, it’s just like it takes more, a lot of developers have to stack of multiple funding especially if you want to focus on the affordable housing.

So I think more money matters, but then you also have to find ways to pull down the cost of building in order to really make the money efficiently allocated. Right now, I think it just took so long for the Congress to pass the Roads Act. So I think they’re taking a little hiatus on what we need to do next. So we’re not really seeing a lot of movement of this is the next direction that we need to go. But interestingly, I think a lot of industries are beginning to enter into this space, like JPMC, Chase, they announced their investment in more affordable housing.

I think that Airbnb did the same. So there are some of the industry players who sees that, “We really do need to have more affordable housing in this area to have the employers in place and also how do we scale up the housing supply?” So there are some efforts from the industry side that is trying to look at this issue and see how they can provide capital more effectively to scale up the affordable housing development.

ELENA RENKEN: Thank you. And a question here from a Chicago based reporter at Stateline. What aspects of that 21st Century ROAD to Housing Act will have an impact on affordability at the local level? And how will state policies factor into that?

[00:48:23]

BRAD GREENBURG: It’s a good question. I would say it’s TBD, the 21st Century ROAD to Housing Act from my perspective, it authorized some new programs, and it definitely changed a couple of things on the way current programs are supposed to operate so you can take some thing called home and put it into new construction more easily. It did something with the RAD program where it made it permanent.

So there’s some changes to the existing programs and some new ones, but there’s no new money yet, so we have to see in the next appropriation cycle if they actually fund some of these new programs or add dollars to some of the existing programs so that some of the flexibility they were given could actually be implemented with new cash.

There’s some stuff to encourage state and local governments to do something maybe Dr. Kim was talked about, which is around land use regulation changes and trying to increase production, so you get rewarded for that in the CDBG program if you increase production. But I would say from my perspective, it’s very much TBD. We’ll see if they actually do some of the rulemaking and appropriations behind it to implement it properly.

[00:49:35]

ELENA RENKEN: A question here from the Beaumont Examiner in Texas, how are natural disasters impacting the housing crisis, specifically for lower-income owners or renters? And what is being done to replenish housing stock that would be affordable in the housing market that would be as affordable as the housing that’s been lost in natural disasters?

[00:49:59]

MINJEE KIM: I mean, that’s a really tricky question and an issue, because the areas that are most prone to natural disasters and are at highest risks are oftentimes the most affordable places to live. So there’s not an easy answer to the question and the problem. But more broadly, again, speaking from the experience of witnessing the L.A. wildfires and what has come about afterwards, the conversations that have occurred afterwards, gradual retreat or moving away from the most vulnerable areas is clearly, regardless of housing affordability in those vulnerable places, is where we need to go, move into in a longer term.

And then in order to do that, we need to build more, or densify existing urban areas, and there’s a lot of opposition in terms of building more and denser in already established neighborhoods. So I think that’s the balance that we’ll need to shift, in a much more broader context. So it’s a regional conversation as opposed to just looking at the vulnerable areas.

[00:51:37]

JUNG HYUN CHOI: Yes. And I will just add to that because this is also affecting the cost of insurance, and that has increased significantly over the past two or three years. And it’s really having a greater impact on the lower income families because they really don’t have much income left after paying for mortgages and all the other things. So we’re actually seeing a greater share of lower-income households giving up property insurance and just living without an insurance that could have a more significant damage when something big hits their household.

So I think this is definitely area that we do need to have more like policy discussion both at the state and federal level. Right now, I think a lot of research have been focusing on okay, here’s the state of the problem, but we don’t have a clear direction on what would be the potential policy solutions to lower the cost of insurance and make sure that a lot of people live in their homes safe and soundly.

[00:52:44]

ELENA RENKEN: A question here from the Providence Eye in Rhode Island. What are some of the best free data sources for local journalists to understand the rising costs of land, construction materials, and other costs for developers? And what are the best questions for journalists to be asking when covering how regulations like rent control could impact housing production? Any broad advice there on those best questions to ask and best free data sources?

[00:53:18]

BRAD GREENBURG: Well, we maintain a free data source for New York City and part of New York State, but I’m not sure where the best one is for Rhode Island. I mean, census data always is good. We do have a thing called the Housing Solutions Lab that you can go to that does have the housing needs assessment tool that gives you census information broken down into different key questions if you prompt it. But we are working with City of Providence right now in that lab, so always happy to take inquiries for data. The rent control question is a really good one.

I know a lot of places are thinking about rent stabilization and rent control. I’d say the question I always ask is what I was alluding to before, which is if I implement a rent stabilization or rent control regime, is it going to keep up with the operating costs of the building or not? And if it doesn’t, it means that you’re basically putting a structural operating deficit in place for the owner, which no one will lend to an owner who has a structural operating deficit.

So let’s say the question is are you structuring your rent control regime to still allow rents to increase with cost? And if you’re not, are you planning to subsidize the housing so that they can continue to operate and pay for boiler maintenance and everything else they have to pay for?

And otherwise, it doesn’t incentivize new construction because you can’t make the math work, operate long term. The other thing to ask is, at what age building will my rent control regime apply? So here in New York City, it only applies to pre-1974 buildings and doesn’t apply to new construction unless the new construction gets a subsidy or a tax abatement of some kind. And then it does come into rent stabilization. So it might be that they’re exempting new construction out of the regulation. In which case, it would have less effect on the ability to make the deal pencil. Hopefully, that’s helpful context.

[00:55:26]

JUNG HYUN CHOI: Yes, just on the data side, we do find that this is the area that has less data. We are currently working with the Furman Center and the Terner Center together to develop a more reliable resources for data in the rental market and the construction market, so there’s more to come, hopefully. But then I agree that if you can reach out to any of the researchers, I think there are a couple of researchers that have that data that can be readily shared to you. So we’re happy to take the request if you reach out to us after the meeting.

[00:56:07]

MINJEE KIM: I just want to point out that there’s this new initiative funded by Arnold Ventures and the Social Science Research Council that it’s called the Build Research Network, and it’s meant to be a network of researchers and policymakers that are interested in housing affordability. And one of their mission and goal is to share databases and resources for both research and for media. So that might be a good place to start in terms of understanding what the existing landscape of available databases are.

[00:56:50]

ELENA RENKEN: Thank you. I have a question here from the Baltimore Sun that says that Baltimore pioneered red lining is something I learned today. What are the remnants, the unofficial or subtle, but powerful effects maintaining these quote unquote boundaries today, whether they’re economic, social, legal, or other? Can anyone offer any context about red lining and its impacts today?

[00:57:13]

MINJEE KIM: Sure. I do want to clarify there that what Baltimore pioneered is racial zoning, which is a deliberate use of zoning to segregate by color of skin. And that practice of racial zoning has been outlawed in 1917 by the Supreme Court through a case in Louisville, Kentucky, called Buchanan v. Warley, which is analogous to red lining, but it’s a separate practice. I do want to clarify that. Red lining as a practice, as many of the reporters on this call would know, it applies to federal regulations in terms of where to lend and what neighborhoods are safe or good places to invest versus not.

And as we’ve seen through over time, over many research and evidence that red lining has had lasting impacts that still continues to date in terms of how these communities have been affected. So the neighborhoods and the households that have been red lined are still one of the most distressed and lower opportunity neighborhoods that we see today, and that these places continue to either continue to be disadvantaged because they lack the adequate infrastructure, have not seen investments coming in to upgrade the neighborhoods.

That legacy is still there, or sometimes the neighborhoods that have been red lined have become sites of gentrification without a lot of protections for the incumbent residents who are feeling the burden of gentrification without adequate support network. So yes, the practice of red lining and targeting specific neighborhoods that have been disadvantaged still continues, the legacies of those impacts and policies continue to date.

[00:59:26]

ELENA RENKEN: Thank you.

[00:59:30]

BRAD GREENBURG: I was going to say, just a piggy back on Dr. Kim said that red lining is about capital allocation, so it was about where am I going to lend money to? I’m not going to lend money to particular neighborhoods that were red lined. And that’s still manifest today. So when we were talking about the homeownership rate among Black folks being lower, less capital being allocated into certain places, sometimes based on lenders thinking there’s higher risk or lower values in those places and less rate of return, it’s very similar to the patterns you would have seen in red lining.

It’s obviously not as intentionally discriminatory, maybe as it was when they first drew the maps, but it’s the same pattern. And so you should think of red lining as being about where I’m allocating my lending resources and my capital and see the historic dimension of that continue over time when you think about red lining.

[01:00:26]

ELENA RENKEN: Thank you. And now I have one last question, which will give our panelists a chance to give key takeaway messages. A quick note for reporters here. You’re going to receive a brief email survey after you leave this call, and if you have even a moment to fill it out, your answers would really help us shape our services like these briefings so that they’re most helpful to you. And now a final question for our panelists here. In about 30 seconds, what is one take home message for the reporters? Minjee?

[01:00:54]

MINJEE KIM: My main message would be that we’re talking about all these different tools and strategies and policies and programs and my point would be that these existing tools will need to be used in tandem and we can’t isolate each program or policy and just go with zoning reform or just go with the housing assistance program. We really need a multifaceted approach to address the housing affordability crisis as well as the supplies shortage.

[01:01:30]

ELENA RENKEN: Thank you. And Jung?

[01:01:33]

JUNG HYUN CHOI: Yes. I would just echo that access to home ownership and building wealth have really long-term implications. So not only on your own wealth, but then the wealth of the future generation that we have been talking about. So the reason that we fail to close the racial home ownership gap despite getting rid of a lot of discriminatory practices is that because parents wealth transfers to the children, and it’s like, to the future generation. So unless we really support those who don’t have access to parental wealth, I think these ongoing disparities in home ownership are likely to continue.

[01:02:12]

ELENA RENKEN: Thank you, Brad.

[01:02:16]

BRAD GREENBURG: I would just say thanks for joining because I think housing is really important. I mean, everyone’s biggest expense is their housing every month. It’s also the way we build wealth in this country, and it’s really important to fund public services through the property tax. So it’s this incredibly rich, powerful, important area of policy to focus on, and folks should pay closer attention to it.

[01:02:43]

ELENA RENKEN: I really appreciate you all joining me today to get into the research on this topic that affects so many Americans’ day-to-day expenses and their bigger decisions. To reporters, thank you all for coming and gathering more research insights for your coverage. We’ll be hosting our next briefing on automated license plate readers and surveillance systems such as Flock cameras next Wednesday, October 7, and I hope we will see you all there. Thank you all.