More states are introducing legislation targeting housing shortages. Here’s why.

State lawmakers from across the country gather for the National Conference of State Legislatures Summit at the the Indiana Convention Center. (Credit: Mark Curry)

The Gist

Lawmakers across the country are increasingly more focused on addressing affordable workforce housing shortages. The proof? The National Conference of State Legislatures has tracked an 89% increase in legislation targeting housing and homelessness from the previous year. 

Indiana was one of the states that passed such legislation, but it’s unclear how much the policy changes will remedy a shortage of hundreds of thousands of units for those with lower incomes. 

What’s happening

NCSL shared that statistic in a packed room of lawmakers and their staff ahead of a session on housing availability during its annual summit in Indianapolis this week. For roughly an hour Jeffrey Lubell, principal associate and director of housing and community initiatives, social and economic policy at Abt Associates, talked about why nationwide there is a shortage of stable and affordable housing, and what can be done to solve the issue. 

According to Lubell, addressing the shortage of housing helps both the economy and people live more healthy lives. 

“If you want to have a strong economy, you need workers and workers need places to live,” Lubell said. “There’s not a large employer I know that wouldn’t hire more people if there was a place where workers could live nearby that they could afford.”

How big is the issue in Indiana? 

A March report from the National Low Income Housing Coalition and Prosperity Indiana found that Indiana has a shortage of affordable housing statewide among very low-income and extremely-low income renting Hoosiers. There are only 39 affordable rental homes for every 100 extremely low income Hoosier renter households in Indiana, defined as making less than $26,500 for a four-person household. 

The availability, of course, varies by county, with the problem exasperated in places such as Tippecanoe and Hamilton counties. 

“Despite an improving state and national economy, this year’s Gap report finds that Indiana is making far too little progress to increase the supply, affordability, and habitability of housing to meet demand in all 92 counties,” Prosperity Indiana Policy Director Andrew Bradley said in a March press release. “This new report shows the gap in affordable housing in Indiana is heavily borne by the lowest-income and most vulnerable Hoosier household.”

What’s driving the problem

Lubell said the lack of housing at an affordable price point is driven in part by: 

  • Restrictive zoning from local governments that require single-family homes in certain areas, as opposed to allowing apartments or townhomes, plus restrictions on accessory dwelling units. 
  • High land prices.
  • Insufficient production of new housing, especially multifamily housing or entry-level homes near jobs or transit.
  • High construction prices.
  • Insufficient incomes. 

What can be done? 

Lubell shared a host of potential solutions during the NCSL panel, but the main point he returned to multiple times during his presentation: States should study the individualized issues they face in providing affordable housing, and encourage local governments to do the same. 

He suggested states could provide funding for housing that targets people making 60% to 120% of the area median income or provide incentives for development near jobs or public transit. 

He also suggested a more unique solution, what’s known as the builder’s remedy, or fair share policies. Under the policy, if an area doesn’t have enough affordable housing, a developer can override local zoning rules to build affordable multifamily housing. Massachusetts, California and New Hampshire all have adopted various takes on the policy, Lubell said.

“It can be controversial,” he said, “but it can be very effective.”

Similarly, Lubell also talked about increasing homeownership rates. In addition to studying the issue and increasing overall housing supply, he suggested increasing funding for down payment assistance. 

He also mentioned a concept called shared equity homeownership, which means communities make a one-time investment to create affordable housing for low-income residents, and then restrict how much that family can sell the house for in the future. The idea is that the property will remain affordable for years. 

How Indiana is dealing with the issue

This past legislative session Republicans shepherded through House Bill 1005, aimed at increasing housing stock. Under the bill, lawmakers created a revolving loan fund that local communities can use to build infrastructure associated with housing developments. The idea is that this will encourage builders to work in high-need areas by making it cheaper for them to build, giving everyone more homes to choose from. 

Affordable housing advocates viewed it a missed opportunity, however, because there was no criteria requiring communities to use the money to build housing below a certain price point. 

How the housing shortage impacts those without homes

A separate NCSL panel on Tuesday hammered home a different point: Affordable housing shortages do contribute to the homeless population, though it’s certainly not the only factor.

It was one of the biggest challenges the United State Interagency Council on Homelessness heard from listening sessions when generating its federal strategic plan, in addition to the rising cost of rent,  slow income growth and other issues. 

“It’s supply plus the system,” said Rossane Haggerty, president of Community Solutions, one of the two speakers at the session. “Even if housing magically appeared everywhere, there would still be those individuals with special needs who get left out of the housing musical chairs, and we need systems to see that everyone has an opportunity to live in a decent, stable home.”

Her advice for encouraging zoning changes at a local level: Lead by example by using state-owned land for affordable housing initiatives. 

Contact Kaitlin Lange on Twitter @kaitlin_lange or email her at [email protected]

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Header image: State lawmakers from across the country gather for the National Conference of State Legislatures Summit at the the Indiana Convention Center. (Credit: Mark Curry)