For years, affordable housing policy has been trapped in a familiar loop. We talk about how little we have and how much we need. We give speeches. We form committees, and we publish nice looking reports about the affordable housing gap that say the same thing every year:
We don’t have enough affordable housing. The system is broken. We need to raise awareness. We need more legislation. We should wait until after the next election.
Over the last decade, countless words have been written, thousands of strongly worded letters have been drafted, and millions of tons of carbon dioxide have been emitted into the atmosphere by planes carrying people into our nation’s capital to tell their elected officials that America needs more affordable rental housing.
And yet, the number of people who pay more than half of their income on rent has grown from 11 million people in 2015 to 12 million people today.
I guess if there is a lesson to be learned from the last ten years, it is that we do not need another report or press conference to tell us that we suck at making rental housing more affordable.
What we do need is to find better ways to make it easier to build, own and operate more affordable housing.
And the good news is that in cities and states across the country, people are beginning to do just that.
Less Talk + More Action = More Housing
In states and communities across the country, people are doing more than just talking about affordable rental housing. They are rolling up their sleeves, sharpening their pencils, and creating it. In 2024 alone, more than 91,000 income-restricted apartment units were completed nationwide, the highest annual total in at least a decade. And, over the full 2020 to 2024 period, the country delivered nearly 310,000 affordable apartments. While these numbers are nowhere near enough, they are a good start.
Importantly, this growth is fairly widespread. While large coastal markets like New York and Seattle continue to produce significant numbers of affordable units, some of the fastest growth has come from places like San Antonio, Phoenix, Charlotte, Atlanta, and Austin.
The communities that succeed all have one thing in common. They recognize that they must do more than ask for more subsidies, they also must simplify the application and approval process and create financing structures that attract more private investment capital.
Our legacy programs still matter. The Low-Income Housing Tax Credit is still the backbone of deeply affordable production. But the next phase of housing policy cannot rely on federal subsidy programs alone. The challenge has grown too large, costs have risen too far, and the need now extends far beyond households traditionally served by traditional federal affordability programs. Teachers, home health aides, public employees, service workers, and other working households increasingly are getting stuck in a cruel economic purgatory: They make too much to qualify for traditional rental housing subsidies and they do not make enough to afford market-rate rental housing.
That is where the conversation gets more interesting. Because across the country, a few public models are beginning to show how to make affordable housing more available to everyone who needs it.
Los Angeles County: Time Is Money
Los Angeles County offers one of the clearest examples of how streamlining and simplifying the process can reduce costs and increase affordable housing supply. The L.A. County Affordable Housing Solutions Agency (LACAHSA) was created to function as a one-stop financing shop for affordable housing. Instead of sending developers on the usual scavenger hunt across multiple city, county, state, and quasi-public agencies, LACAHSA bundles tools in one place: construction loans, permanent loans, rental subsidies, and other financial products.
That may sound like an administrative tweak. It is not. It goes straight at one of the least glamorous but most expensive problems in affordable housing: fragmentation.
Affordable housing finance often works like a bureaucratic obstacle course. A developer needs money from three, four, sometimes five different public sources. Each one comes with its own application, timeline, legal agreements, underwriting standards, and compliance requirements. The result is delay, duplication, and cost. Research from the Terner Center for Housing Studies at Cal-Berkeley found that, in California, each additional public funding source delays a project by roughly four months and adds about $20,460 per unit. On a 100-unit project, that is more than $2 million in extra cost created not by materials or labor, but by wasting time.
LACAHSA is trying to cut through that. In its first major round of housing funding, the agency approved just over $100 million for 10 projects supporting more than 500 affordable units. Just as notable, it is prioritizing projects that can break ground quickly and reduce development costs. Early results suggest that projects relying primarily on LACAHSA funding are coming in below typical county cost levels.
The deeper point extends far beyond LA County, and it shows how streamlining the administrative process can be hardcore housing policy. Every month we save, every duplicative step we remove, every layer of financing we do not need means lower costs, less time, and a more efficient use of taxpayer dollars to build more affordable homes.
New York City: Putting Institutional Capital to Work
If LA County offers a lesson in how to reduce unnecessary costs, New York City offers a lesson in the value of attracting institutional investment capital.
Recently the NYC Comptroller’s office announced that the city’s public pension funds would invest more than $4 billion in affordable housing over the next four years.
That matters because one of the biggest bottlenecks in housing is not policy approval. It is capitalization. Plenty of projects have political support. What they lack is the long-term institutional capital that is needed to make the project a reality.
By putting more institutional investment capital to work, New York City is filling that gap to create and preserve affordable rental housing in one of the highest cost housing markets in the country.
What is most significant about this investment, however, is not that is a huge amount of money. It is the investment rationale that lies behind it.
Like all institutional sources of capital, New York City’s pension funds have a fiduciary responsibility to their investors - the public sector employees who have trusted them with their retirement savings. And because the most impactful thing that a pension fund can do is make sure that retirees get their monthly pension check, they cannot make concessionary investments that put their retirees at risk.
And this is what makes the affordable housing sector so unique. It is the only asset class in commercial real estate where long-term affordable housing policy goals and profitable investment returns can overlap. It is what allows New York City’s pension funds and a growing number of institutional investors around the country to treat affordable housing as a good asset class for long term returns that also happens to be really great for the people who live there.
The larger implication here for policy makers is simple. Instead of making it harder for long-term institutional capital to invest in our communities, we should be making it easier. With the right underwriting, the right intermediaries, and the right product design, public officials can attract more private capital investors to support affordable housing that improves lives, creates community value, and meets their fiduciary obligations.
Massachusetts: Building a Better Capital Stack
MassHousing has long operated as the state’s housing and investment bank. That background matters because it means the agency already understands bonds, debt markets, and how to use capital markets to advance a public mission. Recently, they put that experience to work by creating the Bringing Innovation to Lending and Development (BILD) program.
The program was specifically designed to support the growing number of mixed-income projects in Massachusetts that are stuck in a financing no-man’s land. They are not deeply affordable enough to fit neatly into the tax credit model, but they are too affordable to fit into the traditional market-rate financing box. The only thing stopping these projects from getting done was that developers could not find a capital stack that made sense.
So, Mass Housing built one that did.
The BILD program provides a one-stop financing solution that combines privately sourced permanent debt with mezzanine level financing from an investment fund capitalized with the proceeds from a $50 million housing bond that puts public dollars to work in a private financing structure that can recycle and grow over time without additional subsidy.
Three Stories. One Simple Idea. Four Basic Principles.
Each of these three programs are excellent examples of how communities can make housing more affordable in their backyard. Los Angeles shows how to reduce the cost of fragmentation. New York shows how to bring institutional capital into the market without abandoning fiduciary discipline, and Massachusetts shows how a housing finance agency can redesign the capital stack and combine public equity investments with private debt financing to unlock mixed-income production.
Three different places. Three different approaches. Each one wrapped around the simple idea that affordable housing policy works better with private capital than it does without it.
Housing markets are unique. Political realities are always changing, and not all capital sources are the same. But the operating principles of getting deals done do not change:
1. Never underestimate the value of a quick and consistent execution: The longer a project spends moving across agencies, applications, and approvals, the more expensive it becomes. Time is not neutral in housing finance. Time is cost, and cost is bad.
2. Expand the utility of public funds: Grants and deep subsidies will always be needed, especially for the deepest affordability tiers. But they should sit alongside investment-oriented tools that can support a broader range of projects and households. There are more tools in a toolbox than a hammer and a screwdriver. We should use them all.
3. Make it easier for institutional capital to invest in long term affordability: Pension funds, institutional investors, endowments, and other long-duration capital sources are far more likely to allocate capital to affordable housing projects when public agencies create housing programs that are reasonable, easy to use, and aligned with real risk-adjusted return expectations.
4. Reward Execution: Public agencies should not just care whether a project is eligible for subsidy, but whether it spends the subsidy efficiently. True success is not measured in how much we spend, but how much we create.
As more state and local governments embrace this approach, we will not only create more affordable housing in our communities, but we will also build a broader housing finance system that is faster, less costly, and better capitalized.
The recent production numbers suggest that these principles are taking hold, and that our state and local governments are continuing to lead the way. While they are not yet at the level we need, they are proof that progress is being made.
If you are interested in learning more about the work that State and Local governments are doing to make rental housing more affordable, the Multifamily Impact Council will be hosting an open conversation with Mark Attia, Director of Capital Formation at Mass Housing and Paul Williams, Executive Director of the Center for Public Enterprise on April 30th at 12pm CST.
You can register for the call here.
