The American dream of affordable housing is slipping further out of reach for millions. Rents are rising, wages are falling behind, and supply simply can’t keep up with demand. But why is it so hard to build housing people can actually afford?
America is in an affordable housing crisis. Let’s break down how we got here and what it’ll take to get us out of it.
What Is “Affordable Housing” Anyway?
It’s a term that gets thrown around a lot—but affordable housing doesn’t mean the same thing to everyone. By government standards, housing is only “affordable” if you’re spending no more than 30% of your income on rent or mortgage, including utilities.
So, for someone earning $60,000 a year, affordable housing means spending around $1,500/month. But for someone earning $100,000, that number jumps to $2,500. Affordability, then, is entirely relative.
And yet, more and more Americans are becoming what experts call “cost-burdened.” In Greater Phoenix, for example, over 52% of renters are spending more than 30% of their income on rent. Even more alarming, 25% are spending over 50%.
It’s a Supply and Demand Problem
At its core, the affordability crisis is being driven by a lack of supply.
When there’s not enough housing to go around, prices go up—especially in high-demand markets. But building new housing isn’t as simple as breaking ground and putting up walls.
Developers face high land costs, rising construction costs, expensive permitting, and local zoning laws that make it nearly impossible to build anything but luxury, Class A properties.
And even in areas where new supply is added—like downtown Phoenix—rent deals and concessions are only temporary. Once the excess inventory is absorbed, prices usually go right back up.
Why Don’t We Just Build More Affordable Housing?
It’s not that developers don’t want to build affordable housing—it’s that they often can’t.
There are several barriers in the way:
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Design and zoning regulations: Cities often require “gingerbread” architectural features, expensive landscaping, and parking minimums—all of which raise costs.
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Neighborhood opposition (NIMBYism): Homeowners worry that affordable or multifamily housing will drive down property values or bring more traffic and crime. As a result, city councils often vote down projects due to political pressure.
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Land costs: In cities like Scottsdale, land can cost $1 million per acre—making it nearly impossible to pencil a deal with affordable rents.
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Lack of government support: Without public incentives like tax credits or abatements, most developers simply can’t afford to build anything but high-end units.
What About Government-Built Housing?
Government-funded housing projects have a long history—and not always a good one. From Chicago’s infamous high-rises to the deteriorating tenements in New York, public housing has often lacked the management, maintenance, and community investment needed to succeed.
Today, most cities focus on public-private partnerships—using tools like Low-Income Housing Tax Credits (LIHTC), tax-exempt bonds, and property tax abatements to incentivize private developers to build.
But even those projects are complicated, slow, and expensive to complete. They require layers of approvals, funding sources, and long-term affordability commitments that make them difficult to scale.
What Is Working?
Some strategies are beginning to make a dent, including:
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Inclusionary zoning: Offering density bonuses or faster permitting in exchange for a percentage of affordable units.
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Micro-units and modular housing: Smaller, more efficient living spaces can drive down costs while maintaining quality.
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Employer partnerships: Companies like Amazon and Google are investing in workforce housing to attract and retain employees.
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Transit-oriented development: Cities are encouraging higher-density housing near public transportation hubs to increase affordability and walkability.
What’s Not Working?
Policies like rent control, while popular, often backfire. When landlords can’t raise rents to keep up with inflation or expenses, they cut back on maintenance—or worse, sell off properties entirely. Rent control can also discourage new development, exacerbating the supply problem.
Similarly, outdated zoning laws that restrict density or prohibit mixed-use communities create structural barriers to affordable development.
The Bottom Line
Affordable housing isn’t a simple issue. It’s the result of economic pressures, political resistance, regulatory constraints, and public perception.
And while developers want to build housing that meets market demand, they can’t do it without the support of cities and communities willing to embrace thoughtful planning, modern zoning, and realistic incentives.
If cities truly want to make housing more affordable, they need to align their policies with the market—and work with, not against, the people trying to solve the problem.
