Housing Supply Solutions

If the next President invited you to join a task force setting rental housing policy to increase supply and improve affordability, what would you advise? I asked this question to two men who belong on such a task force – David Brickman and Hugh Frater, the former CEOs of Freddie Mac and Fannie Mae, respectively. I learned a ton from both of them (and you can see/hear their full answers on the most recent two episodes of The Rent Roll podcast). Here are 5 (out of many) highlights. 1) Empower Fannie and Freddie to provide construction capital. Today, the GSEs can only lend on stabilized apartments, not new construction. Frater said: “Where the federal government can help is lowering the cost of capital and ensuring more projects will pencil.” Brickman proposes allowing the GSEs to offer a construction-to-permanent loan program. Others (like Bob Simpson) have proposed a hybrid structure where the GSEs could inject preferred equity to help close the financing gap. 2) Protect Fannie and Freddie from politicization and scope creep through new operational requirements (i.e. rent control) attached to loans. Brickman said it “could start to push some borrowers away, and that undermines the potential effect” of the GSEs in encouraging supply. Brickman pointed out a comparison point on the single-family mortgage side with FHA loans, where some lenders won’t offer them due to concerns about potential compliance issues and risk of “getting on the wrong side of the government.” Frater, for his part, noted that it’s not unfair to attach some reasonable requirements to federal subsidies, but the risk of installing policy platforms through the GSEs “is an argument for getting them out of conservatorship.” 3) Brickman proposed establishing a model to renovate aging apartments (including expiring tax credit deals) while preserving affordability. Today, investors have limited options with older apartments. If you renovate it to modern standards, you risk displacing residents. If you don’t renovate it, you risk being labeled an “absentee landlord.” 4) Focus on programs that create more affordable and workforce housing. Brickman suggested expanding LIHTC to include moderate-income workforce housing and also providing federal support to state and local affordable housing preservation/creation programs. Frater said any new programs should be simple, useable, deficit neutral and focused on supply. 5) Reform existing programs to maximize the impact. Frater called out leakage in Section 8 vouchers plus city approval processes that drive up costs to build housing. “Our objective should be to maximize the number of units produced per dollar of tax credit. That might mean in some places, like California, that unless they change their permitting and approval requirements, there may not be housing built.” There's a ton more in each of the two podcast episodes (links in comments). Deeply grateful for Hugh and David, and I hope our next leaders heed their guidance.

🏠 Housing is not "expensive." Housing is mispriced relative to income. This OECD chart should make policymakers, investors, and households deeply uncomfortable. 📊 What we're seeing The OECD Home Price-to-Income index (2015 = 100) shows the extent to which housing prices have decoupled from household disposable income. OECD average: 116 Portugal: 158 🚨 Canada: 135 U.S.: 130 Spain: 117 Germany: 107 France: 94 Italy: 87 Some countries are living in a different reality altogether. ⚠️ The complication no one wants to admit. This is not just about "high interest rates" or "temporary supply issues." It's a structural affordability crisis driven by: Asset inflation > wage growth Housing is treated as a financial asset, not social infrastructure Zoning, regulation, and construction bottlenecks Capital concentration (domestic + foreign) is chasing scarce tangible assets 💣 The implication (and this is the uncomfortable part): When price-to-income ratios stay elevated for long periods: Homeownership becomes a generational privilege Labor mobility collapses Productivity suffers Political and social tension rises Rent becomes the new tax on the middle class This isn't a "housing cycle." It's a wealth transfer mechanism. 🎯 My position (tell it like it is) Countries above the OECD average are implicitly betting that: "Incomes will eventually catch up." History says they won't—at least not fast enough. Without real income growth, a massive acceleration in supply, or policy intervention, affordability doesn't self-correct. 🛠 What actually works. The data is clear on what moves the needle: Large-scale supply expansion (not pilot projects) Faster permitting and zoning reform Industrialized construction & ConTech adoption Separating housing policy from short-term political cycles Treating Housing as productivity infrastructure, not just wealth storage 🌱 The upsidee Countries that fix affordability unlock: Higher labor participation Stronger urban productivity More resilient middle classes Sustainable long-term growth Housing affordability is no longer a real estate problem. It's a macro, social, and competitiveness problem. And the longer we delay, the higher the bill. 📌 Source: OECD Housing Price-to-Income Index (Q3 2024, indexed to 2015 = 100) 🔗 https://lnkd.in/esxxFdwB #Housing #RealEstate #AffordabilityCrisis #Macroeconomics #UrbanEconomics #OECD #Inequality #Productivity #PolicyFailure

New York City just made a historic bet that the best way to fix its affordability crisis is to build. By passing three new ballot measures, New Yorkers voted to fundamentally change the rules of development. The goal is to directly attack the biggest barriers to new housing: time, cost, and political uncertainty. Here’s the breakdown: Prop 2: Creates a fast track for 100% affordable projects and new housing in low-build neighborhoods. Prop 3: Does the same for "modest density" increases—think adding a few more units to a small building. Prop 4: Creates an appeals board that can overturn a "no" vote on an affordable project. As Redfin's Chief Economist, I’m excited to see voters address the economic causes of housing unaffordability. These changes will de-risk development. The hope is to unlock thousands of affordable units that were previously killed by local opposition, saving millions in project costs. With a rental vacancy rate near 1%, it is incredibly hard for New Yorkers to find rentals within their budgets, and they decided to address the root cause: the lack of supply. We love to see it!

Kicking off 2026 with a new idea to help fix Canada's housing crisis. Simple tax policy could help finance new construction of much-needed rental units while at the same time opening up home ownership for families. Mike Moffatt, PhD, Matthew Mendelsohn and I have been working on this idea, and wrote it up for The Star. A ton of homes (1.3M) that could be owned by families are instead owned by Canadian investors - most of them individuals. We could encourage those investors to sell by letting them re-invest the proceeds into new rental construction and defer their capital gains taxes. If the government couples this idea with their campaign promise to bring back tax incentives for new rental construction (like the Multi-Unit Residential Building incentive from the 70s known by the horrible acronym MURB), it could be one of those rare two birds with one stone policies. This is exactly the kind of idea this government seems to prioritize - clever tax policy to encourage productive investment by the private sector to build the things we need quickly. And if designed properly, will keep ownership of Canadian real estate in Canadian hands, and increase the supply of both rental and ownership opportunities for Canadian families. We need to fix the housing crisis. We need to make our capital more productive. And we need to increase Canadian ownership. This idea isn't a silver bullet, but it helps with all of those things. Take a look and would be keep for feedback. https://lnkd.in/g7473Etz

The latest State of the Nation’s Housing report from Harvard Joint Center for Housing Studies is a sobering reminder that simply building more homes isn’t enough. Yes, increasing supply matters, but unless we deliver the right supply in the right areas, the affordability crisis only deepens. The US experience shows that even with record levels of new construction, most of it has been concentrated at the higher end of the market. Rising land, construction, and infrastructure costs, combined with developer return expectations, are pushing rents and sale prices ever higher. At the same time, the stock of genuinely affordable rental homes has collapsed, homeownership rates for younger and lower-income households have fallen, and homelessness has surged to record levels. The clear takeaway for New Zealand? Market-led housing delivery alone cannot solve our affordability challenges. Without targeted Government, CHP, iwi, church, and philanthropic intervention, the market will continue to underserve those on lower incomes, locking more whānau out of secure, affordable homes. Perpetuating our long and continued social and economic decline. We need bold, coordinated action to deliver a better mix of supply: * Affordable rentals in the right locations * Smaller, more attainable homes for first-home buyers * Supported pathways into homeownership for those excluded by deposit and mortgage hurdles * Investment in social and community housing for those most in need The US housing system reminds us: the market will chase profit (as it is meant to do). But a just, inclusive housing system takes leadership, intentionality, and public investment. There are signs of progress in New Zealand — the Government’s new Flexible Fund, the rise of philanthropic and impact investment in housing, the growth of papakāinga and iwi-led developments, and Councils across the country beginning to allocate land and resources for more affordable homes. But let’s be clear: it’s not nearly enough. If we want to change the trajectory, we need more than good intentions. It’s time to get serious about building more of the right type of homes, and building equity for all. Doing so is good for us all.

Big City Counsel Vote coming up tomorrow on "The City of Yes" We say we need housing, we say there's a housing shortage crisis, we say we want to increase supply to lower rents... but let's see if City Counsel's actions and their words match. The “City of Yes” initiative, launched by New York City Mayor Eric Adams, aims to address the city’s housing crisis through comprehensive zoning reforms designed to increase housing supply and affordability. Key strategies of the initiative include: 1. Zoning Reforms: Modernizing outdated zoning laws to permit higher-density housing and a variety of housing types across neighborhoods, facilitating the construction of new residential units. 2. Accessory Dwelling Units (ADUs): Allowing homeowners to convert spaces like basements, attics, and garages into additional housing units, thereby increasing the number of available residences. 3. Residential Conversions: Simplifying the process for converting underutilized commercial buildings into residential spaces, effectively repurposing existing structures to provide more housing options. 4. Transit-Oriented Development: Encouraging higher-density housing development near public transportation hubs to promote sustainable living and improve access to transit. 5. Town Center Zoning: Adjusting zoning regulations in neighborhood centers to support mixed-use developments that combine residential, commercial, and community spaces, fostering vibrant, walkable communities. 6. Parking Requirement Adjustments: Reducing or eliminating mandatory parking minimums for new housing developments, particularly in areas well-served by public transit, to lower construction costs and encourage the use of alternative transportation modes. 7. Small and Shared Housing: Facilitating the development of smaller housing units and shared living arrangements to provide more affordable options for individuals and small households. Collectively, these measures aim to create approximately 80,000 new homes over the next 15 years, contributing to a more inclusive and affordable housing market in New York City.

New research from the Urban Institute confirms what #FHLBank members see every day: when local lenders have reliable access to Federal Home Loan Bank advances, communities see more #housing and #communitydevelopment #lending. That increase in lending is one of the most practical ways to expand #housingsupply and improve #affordability over time. The Urban Institute finds that increases in FHLBank borrowing are associated with higher overall lending by small #banks, with even larger gains in residential and commercial real estate lending that support housing and community development. More credit flowing into mortgage and development pipelines helps get more homes built, preserved, and financed. These results reinforce that FHLBank advances are not an end in themselves, but a catalyst that turns balance sheet #liquidity into mortgages, small business loans, and neighborhood investment, exactly the kinds of projects that relieve pressure on tight housing markets. By stabilizing the cost and availability of mortgage credit, FHLBank liquidity helps keep borrowing costs lower than they otherwise would be, saving homeowners money and supporting more sustainable, affordable homeownership. Advances and targeted community lending programs also channel capital into affordable housing production and preservation, supporting projects that add to the housing stock, especially in underserved markets where supply constraints are most acute. The FHLBanks are member-owned cooperatives that exist to provide dependable, cost-effective liquidity so local lenders can keep serving families, small businesses, and communities in all economic conditions. That support enables members to finance affordable rental housing, first-time homebuyer opportunities, and community facilities that would otherwise struggle to pencil out. This study validates that FHLBanks turn stability into possibility and capital into community impact by powering lending that helps build and preserve affordable housing, create jobs, and strengthen local economies, helping ease the affordability crunch while expanding housing supply over the long term. https://lnkd.in/eTUx2bcd

While no single piece of legislation can solve America's housing shortage overnight, the newly enacted 21st Century #ROADtoHousingAct represents one of the most significant bipartisan housing efforts in decades. Its greatest strength is not any one provision, but rather its focus on addressing the structural barriers that have constrained housing supply for years. One area that deserves particular attention is the potential for Accessory Dwelling Units (#ADUs). ADUs offer a rare housing solution that benefits nearly everyone: ✅ They expand housing inventory without requiring large new subdivisions or expensive public-sector construction programs. ✅ They create housing in existing neighborhoods where jobs, schools, and infrastructure already exist. ✅ They provide homeowners with an opportunity to generate additional income, helping offset rising housing costs, property taxes, insurance premiums, and mortgage payments. ✅ They can create more housing options for multigenerational families, aging parents, caregivers, adult children, and workforce households. California has already demonstrated what is possible. Cotality's Matt Delventhal showed this in his most recent analysis (with more to come): https://lnkd.in/g76CcsCz. Since regulatory reforms were enacted, ADU construction has grown dramatically and has become an increasingly important source of new housing production across the state. In a housing market where affordability remains a challenge and financing large-scale development is increasingly difficult, ADUs effectively turn existing homeowners into small-scale housing providers, particularly given that existing homeowners currently own $35 Trillion of the $48 Trillion of residential value . Rather than placing the entire burden of solving the housing shortage on governments, builders, or institutional investors, ADUs allow households themselves to become part of the solution. Economically, this is an important shift. Homeowners gain an income-producing asset, communities gain housing diversity, and the market gains incremental supply. While ADUs alone will not eliminate the nation's estimated housing deficit, they represent one of the most scalable, politically feasible, and financially sustainable ways to increase supply over time. The ROAD to Housing Act will not produce immediate affordability relief. But if every community added a few more homes through ADUs, #duplexes, and other small-scale #infill housing, the cumulative impact on affordability could be far greater than many realize. #Housing #RealEstate #Affordability #ADUs #HousingSupply #ROADtoHousingAct #Economics #HousingPolicy #Homeownership #Cotality

Aaron Barrall and I have evaluated the city of Los Angeles' proposed Citywide Housing Incentive Program (CHIP) reforms, with a focus on the Mixed Income Incentive Program (MIIP) and two Single-Family Options. In compliance with the city's housing element, CHIP was developed to increase zoning capacity by at least 255,000 units. State law also requires that local governments affirmatively further fair housing, which is generally understood to mean focusing new housing capacity and production in higher-resource areas. The report is not yet available on the UCLA Lewis Center for Regional Policy Studies website, but you can read it on eScholarship: https://lnkd.in/gHidnanC CHIP is being discussed by the LA City Council on Nov 19 at a special meeting of the Planning and Land Use Management committee, so we hurried to get this out with enough time for folks to review. Special thanks to Claudia Bustamante for making sure this could be published before the weekend. Some key takeaways: • We find that MIIP increases “net realistic capacity” — which we define in the report — by an estimated 380,500 units, nearly 30% above existing policy. MIIP likely satisfies the requirement to increase zoning capacity by at least 255,000 units. • Relative to existing policy, MIIP also increases capacity most in “high resource” and “highest resource” census tracts, as defined by the state. Net realistic capacity rises by 67-84% in higher resource neighborhoods and by less than 10% in low and moderate resource neighborhoods. • However, total realistic housing capacity remains concentrated in lower-income neighborhoods. Nearly 60% of the total net realistic housing capacity is in lower-tier housing markets, where a city consultant determined that mixed-income development is generally infeasible. • We use the Fair Housing Land Use Score (FHLUS), developed by the Lewis Center, to evaluate existing policy and MIIP. Both receive negative scores, but MIIP improves the citywide FHLUS from –0.32 to –0.21. • Finally, we evaluate two of seven single-family rezoning options introduced in a Planning Department report to the City Planning Commission. SF Option 1 dramatically increases net realistic capacity and improves the citywide FHLUS (with MIIP) from –0.21 to 0.05. SF Option 1 increases capacity and improves the FHLUS only marginally. • MIIP represents a positive step forward, but Los Angeles will fall far short of its housing production goal unless SF Option 1 — or a similarly ambitious single-family upzoning policy — is also adopted. Failing to incorporate single-family parcels into its reforms will also delay progress on neighborhood desegregation and sustain rising rents and displacement of vulnerable households.

Home Affordability: Demand Problem or Supply Problem? This shows the problem was decades in the Making. Although there is much debate on this topic, the data I believe seems only to point to this as a fact. Knowing this is critical to innovating solutions. For much of the post-war era, America built owner-occupied housing far faster than population growth. From 1950–2000, owner-occupied units grew nearly 3x, while population grew less than 2x. Supply stayed ahead of demand—and broad homeownership followed. That model is gone. Since 2000, owner-occupied housing growth (~24%) has barely kept pace with population growth (~22%). When you factor in household formation, immigration, second-home demand, and smaller family sizes, supply is no longer keeping up. The result is predictable: shortages and price pressure. Research consistently points to three core concerns: 1️⃣ Regulatory Cost Inflation Building codes, zoning, impact fees, and approval delays now add substantial cost. Industry research shows regulations alone can add ~$90,000+ per new home, pricing millions out before construction even starts. The local, state and federal governments can and should lead the charge to change this. 2️⃣ Structural Underbuilding The U.S. has underbuilt housing for more than a decade relative to household formation. Even “normal” population growth requires excess building to prevent shortages—matching growth is not enough. Builders and infrastructure lenders can make a difference on this. 3️⃣ Market Misalignment Most new construction targets higher price points, while entry-level and workforce housing remain economically infeasible under current rules and costs. Both governmental and Builder executives can work together to incent this need. Actions: • Regulatory Reform: Streamline zoning, permitting, and building requirements—especially for entry-level housing. • Incentives for Attainable Housing: Tax credits, density bonuses, and public-private partnerships to make workforce housing viable. • Modern Construction & Financing: Factory-built homes, smaller footprints, and financing models that reduce time and capital friction. Home affordability is not a mystery. It’s math, policy, and execution. If we want broad homeownership again, supply must once again lead demand. That era doesn’t have to be over—but it won’t return by accident. Let’s do it. #HousingAffordability #HomeOwnership #HousingSupply #RealEstatePolicy #MortgageIndustry #EconomicGrowth #AmericanDream