Our nation faces a severe and worsening housing affordability and supply crisis. Elevated mortgage interest rates, rising home prices, and a record-low supply of available homes are impacting local housing markets across the country. As a result, families across the nation have far fewer homeownership opportunities, underscoring the need for nonprofit-led housing affordability.

Moreover, the underproduction of single-family housing over the past decade, combined with the unprecedented escalation of home prices, is widening the racial wealth gap. Homeownership is a major driver of household wealth, yet the racial homeownership gap is worse today than when the Fair Housing Act was passed in 1968.

Closing the racial wealth gap means increasing affordable routes to homeownership—especially for borrowers of color. This is where nonprofit-led housing affordability solutions come in. To achieve this requires a deeper understanding of the current housing crisis and how nonprofits can, with policy support, implement effective solutions.

The housing market has always included investors, from “mom and pop” middle-class Americans renting out a single unit to supplement their income to much wealthier people who own extensive real estate portfolios. But in the immediate aftermath of the Great Recession, institutionalized private equity, such as Blackstone, began investing in large portfolios of single-family homes, holding them as long-term rentals.

This shift disrupted the balance in the housing market that had made homes affordable for many Americans. Evidence of this imbalance is overwhelming, as seen in the growing dominance of private equity in the single-family rental market.

The nation now faces an unprecedented lack of housing supply, which is driving up home purchase prices and rental rates. For example, in the fourth quarter of 2023, investors purchased 26 percent of the nation’s most affordable homes—the highest share ever recorded. In some states, such as Indiana, investor presence has increased as much as 262 percent in the last five years. As investors buy up and consolidate control of American housing stock, would-be homeowners struggle to find affordable homes amid a tightening housing supply and rising interest rates.

Read the full article about nonprofit-led housing affordability by Christopher Tyson at Nonprofit Quarterly.