(co-authored with Ben Preis and Michael Saadine)

This is the fourth and last in a series of initial policy newsletters being produced alongside the National Housing Crisis Task Force, which will soon release a national policy agenda with recommendations that the federal government can implement to address our housing crisis. The Task Force, an ambitious, two-year project to bring the most promising innovations in housing production, preservation, and finance to communities across the country, was launched in July by the Nowak Metro Finance Lab at Drexel University and Accelerator for America (AFA). If you want to make sure you receive all updates and reports from the Task Force, please register here.

As housing takes its place as one of the leading national and local issues, topics that we have previously written about like federal government leadership, reducing barriers, mobilizing capital, and industrial policy innovation have rightfully taken center stage. In addition to these key themes, we must not lose sight of the occupants of housing — homeowners and tenants — especially the most vulnerable among them. In our final preview of the National Housing Crisis Task Force’s upcoming national policy agenda, we want to focus on the theme of providing a housing safety net.

Even with fixes to the seemingly intractable problems that have caused housing undersupply, there are millions of Americans for whom the private market, without significant subsidy, will never deliver the types of housing they need at levels that they can afford. A strong safety net is needed to prevent homelessness, help low-income households find stable, affordable housing, and protect tenants of all incomes. We should ultimately seek to be a country in which households that fall on hard times are never without a stable place to call home.

There is a strong argument to be made that investing in a housing safety net would have strong, positive, downstream effects. When people are stably housed, they are better able to address other concerns in their life, such as health and education. Indeed, housing instability has a major impact on households’ health.[1] It is easier and more cost efficient to keep people housed than it is to rehouse them once they are homeless. Keeping people housed, however, requires a sufficient supply of affordable housing for low-income households, and a safety net so that households that fall on tough times aren’t put out on the street. For those who are currently homeless, providing targeted, sufficient services and supportive housing can ensure that they get access to the resources they need while reducing strain on our other social safety net systems.

Affordable housing remains a key segment even in a supply-friendly environment

In addition to supply measures discussed in previous newsletters, a thriving affordable housing ecosystem needs to focus on helping renters on the demand side, rehabilitating existing affordable housing stock, and even thinking beyond low-income renters to moderate-income renters.

Universal vouchers has long been a north star for housing advocates, and rightly so. Today, 83 percent of households who make under $30,000 per year pay more than 50 percent of their income on rent.[2] Only 25 percent of eligible low-income households receive housing choice vouchers; it is the only entitlement that we actively ration, unlike food stamps, Medicaid, and unemployment insurance. The federal government should commit to a universal voucher system in which all eligible tenants who apply can receive a voucher.  Universal vouchers would be expensive — estimates are as large as $168 billion per year — and would need to be treated as a mandatory expenditure. The likelihood of Congress, even in the best of circumstances, making this investment is small. For that reason, it is time to start phasing in universality, by starting with groups of renters (e.g., veterans or lowest income households), and ensuring that demand-side subsidies are paired with supply expansions to bring down the per-household cost of a voucher.[3]

While working on revitalizing the dream of homeownership through new supply is important, we should also acknowledge the country’s renters. The federal tax code significantly rewards real estate ownership, while providing little direct support for renters. The government should consider a tax credit for low- and moderate-income renters who are not otherwise taking advantage of housing support. An example construct would allow renters to claim a credit for the amount of rent they paid in excess of 30% of their income, up to 120% of the Fair Market Rent of their zip code. When paired with a universal voucher, this tax credit could help moderate-income households afford rent without a direct appropriation. With the expiration of the 2017 Tax Cuts and Jobs Act next year, a renter tax credit should be on the table — and the savings generated by making permanent the limits on the  mortgage interest deduction enacted in 2017 could be used to pay for the renter credit. The goal of this renter tax credit is to reduce the overall cost burden of monthly housing costs, which when more than 30% of household income, limits what a household can afford for other necessities such as food and healthcare.

The condition of existing subsidized affordable housing stock is often overlooked in favor of discussions of new supply, but preservation and rehabilitation of the affordable housing we do have is essential, especially in a time of a severe housing shortage. Deeply subsidized units with funding from the federal government represent nearly 6 percent of our rental housing stock.[4] It has been estimated that there is a $70 billion backlog of needed capital repairs to the country’s public housing stock.[5] Congress should authorize a one-time appropriation for the rehabilitation and updating of this stock to account for necessary deferred maintenance. Further, some federal funding should be predicated on public housing authorities getting smart about using their land as a source of revenue, as Atlanta is doing with its new Urban Development Corporation, to subsidize the rehabilitation of their existing units.

The current state of homelessness is unacceptable

The rising cost of homes and rents across the United States has led to a staggering rise in homelessness. Nationally, the number of individuals who are homeless — living in shelters or otherwise — was higher in 2023 than at any point since 2007.[6] Homelessness, often thought of as an urban problem, affects rural and suburban areas and has increased in states from coast to coast.  In a nation as rich as the U.S., homelessness must be eliminated.

One local innovation that HUD could work to replicate nationwide is that of Housing Command Centers, which has been implemented in places like, King County, WA, Washington, DC, and Cleveland, OH. Cities have made progress in sheltering their unsheltered residents by expanding their ability to coordinate advocates, outreach, and partnerships. This type of program supports basic health and safety needs but intentionally focuses on rapidly connecting people to permanent housing. It also includes services like obtaining ID, social security cards, homeless verification documents, security deposits, and application fees, as well as providing necessary financial assistance if needed and providing transportation to tour available units. This model could be made eligible for Continuum of Care funding through amendment of the HEARTH Act.

The federal government should take a variety of actions to invest in solving the homelessness problem: prevention, crisis response, short-medium term rental assistance, permanent supportive housing, workforce development, and new model benefits and reimbursements. To prevent further increases in homelessness, the government should authorize Emergency Rental Assistance for approximately 3 million severely cost burdened renter households — a number that will decrease as other housing production efforts take effect. To respond to the crisis, shelter capacity should be increased. About half of all people who experience homelessness can be helped with lighter-touch Rapid Re-Housing services with housing navigation assistance.

The federal government can also increase permanent supportive housing units for those experiencing chronic homelessness as well as the non-chronically homeless with high-service needs. Homelessness workforce issues should also be addressed through modernization of homelessness service salaries. Finally, building on the HUD-VA Supportive Housing program, the government should create a model Medicaid benefit and reimbursement method for supportive housing. Taken together, these comprehensive investments would total $55-$60 billion and could end homelessness in the United States.

Housing problems are concentrated in certain places

Over the past 30 years, the federal government has tried to get smarter about where it supports housing development. From HOPE VI in the 1990s through Choice Neighborhoods today, these programs support holistic housing redevelopment. But the federal government could do more to help communities with holistic neighborhood redevelopment projects centered around affordable housing. This initiative could enable a range of interventions that are fit to market realities and community vision. One community might focus on the acquisition and restoration of housing — including scattered-site single family homes and small multifamily properties in need of capital upgrades — such that these assets can be returned to functioning use and can revitalize the neighborhoods in which they are located.

The federal government could also experiment with new models of homeownership. Homeownership remains out of reach for too many. Downpayments and poor credit scores are both major barriers to many households, who are unable to save for a downpayment or qualify for a mortgage. While there are extensive examples of traditional downpayment assistance programs, lease-purchase and rent-to-own programs have also proliferated in recent years. When designed well, they can provide an important pathway to ownership for renters who seek housing stability, but who do not yet have sufficient credit scores or savings to enter homeownership. When designed poorly, they can become predatory, locking consumers into poorly priced purchase agreements with confusing fees. The FHA could incentivize quality lease purchase programs by piloting a program to provide mortgages to tenants transitioning to homeownership from lease-purchase programs. This program could help standardize lease-to-own programs and provide a pathway to homeownership for households for whom the opportunity would otherwise remain out of reach. This could help counter the hoarding of single-family homes by absentee landlords as well as prevent displacement in transitioning neighborhoods.

In the end, the housing crisis is felt most deeply by the most vulnerable in our society. Renter burdens have become more acute over the passing decades, as supply constraints have radically boosted prices.  The time is long past due to supplement incomes and take other measures to ease the pain.

[1] Gabriel L. Schwartz, Kathryn M. Leifheit, Mariana C. Arcaya, and Danya Keene, “Eviction as a Community Health Exposure,” Social Science & Medicine 340 (2024): 116496, https://doi.org/10.1016/j.socscimed.2023.116496.
[2] Joint Center for Housing Studies of Harvard University, State of the Nation’s Housing 2024. Cambridge, MA: Harvard University, 2024. https://www.jchs.harvard.edu/state-nations-housing-2024
[3] Sonya Acota, “Three Principles for a Rental Assistance Guarantee,” Center on Budget and Policy Priorities, https://www.cbpp.org/research/housing/three-principles-for-a-rental-assistance-guarantee.
[4] Schwartz, Alex F. Housing Policy in the United States. 4th ed. New York: Routledge, 2021. Table 1.1. https://doi.org/10.4324/9781003097501
[5] Will Fischer, Sonya Acosta, and Anna Bailey, “An Agenda for the Future of Public Housing,” Center on Budget and Policy Priorities, March 11, 2021, https://www.cbpp.org/research/housing/an-agenda-for-the-future-of-public-housing
[6] Harvard Joint Center for Housing Studies, The State of the Nation’s Housing 2024.

Bruce Katz is the Founding Director of the Nowak Metro Finance Lab at Drexel University. Ben Preis is the Director of the National Housing Crisis Task Force and a Senior Research Fellow at the Nowak Lab. Michael Saadine is a Senior Advisor to the Nowak Lab and Managing Partner at Invisible Group, an interdisciplinary real estate investment platform.