Housing costs are rising faster than incomes, putting greater financial stress on U.S. families. In 2017, nearly half of renter households spent more than 30 percent of their income on rent, meeting the Department of Housing and Urban Development’s (HUD) definition of being “cost-burdened.” While affordability has long been a problem for poor renters, even middle-income households are facing greater challenges, particularly in urban areas with strong job markets. And where people can afford to live has important implications. Research shows that children who grow up in high-opportunity communities have better economic outcomes as adults. Cities and neighborhoods with strong labor markets and good schools——exactly the places in highest demand——are not building enough new housing, contributing to worsening affordability. Because housing near jobs and transit centers is so expensive, low- and moderate-income people are pushed to cheaper housing on the outskirts of metropolitan areas, requiring them to spend more time and money commuting.

Just as health care reform under the Affordable Care Act was designed as a “three-legged stool,” improving housing affordability will require better alignment of three policy tools: reforming land use regulation to allow smaller, more compact housing; increasing taxes on expensive, underused land; and expanding housing subsidies to low-income households. Each of these changes are described in more detail below.

Read the full article about housing affordability by Jenny Schuetz at Brookings.