Why Affordable Housing Keeps Getting More Expensive

One of the few things that public officials across the political spectrum can agree on is that we need more affordable rental housing. And over the last decade, a lot of work has been done.

Since 2015, state, local and federal governments have spent hundreds of billions of dollars, passed over 200 inclusionary zoning ordinances and created more than 300 pro-housing rules and policies.

Despite all of this work, the number of cost burdened renters in the United States has grown by more than one million households. We’ve created 500 programs and spent hundreds of billions of dollars, and everything just keeps getting worse.

And maybe it is time to take a step back and ask ourselves why we keep screwing this up.

We Came. We Saw. We Made It More Expensive.

There are two multifamily apartment buildings located within a mile of each other in a medium sized city in the Northeast United States. One is a luxury high rise apartment and the other is an affordable rental housing property. Both were recently purchased and renovated. Let’s call them Property A and Property B.

The total project cost for Property A was $506,000 per unit.

The total project cost for Property B was $388,000 per unit.

If you were new to the world of affordable housing, it would be logical to assume that Property A was the luxury apartment.

But, you would be wrong. Property A was the affordable deal. And not only did it cost 33% more to build, it also took 5 years longer to complete.

After a decade of creating hundreds of well-intentioned and innovative programs to solve our affordable housing crisis, we have somehow managed to make it less expensive to build luxury high rise apartments and more expensive to build affordable rental housing.

It is a remarkable failure1, and it sheds some light on what might be causing us to fail so badly in the first place.

We create promising new products and funding programs that look great on paper. Then we stack them atop outdated zoning codes, fragmented and inefficient financing systems, outdated and duplicative regulatory processes, and existing programs with incompatible terms and definitions. And then, we wonder why it keeps getting harder and more expensive to solve the problem.

The truth of the matter is that even best designed affordable housing program is bound to fail because we don’t have a common system that ensures our programs are compatible, easy to use, and cost-efficient.

We don’t have a broken system. We have no system. And that is why we keep making everything worse.

What Does A Good System Look Like?

When the modern internet was born, it wasn’t obvious how to connect thousands - let alone billions - of devices across the world. Early networking systems were siloed, complicated, and incompatible. Different companies and institutions built their own protocols that didn’t easily talk to each other.

The breakthrough came with TCP/IP (Transmission Control Protocol/Internet Protocol). Adopted as the foundational standard for the internet in 1983, TCP/IP introduced a simple, powerful idea: create a basic, open set of rules for how data moves across networks, and let everything else evolve on top of that foundation.

TCP/IP didn’t try to predict every future use case. It didn’t build in complex, customized solutions for every possible user. Instead, it created a lightweight, flexible system that made it easy for innovators to add new services—email, websites, streaming video, cloud computing—without redesigning the whole infrastructure each time. It reduced friction, making innovation and global scaling possible.

The internet works pretty good these days. Not because someone built a perfect program or app, but because we built a system that made it easy to build, connect, and adapt over time.2

The affordable housing environment of today is a lot like the early days of the internet.

We have created hundreds of fragmented programs, each with its own rules, compliance frameworks, financing mechanisms, and approval processes. Every time a new initiative comes online, everything gets a little more complicated.

Instead of developing a system with standard protocols and allow us to design simpler and more scalable solutions, we just keep doubling down. Every time we see a new specific problem we invent a new specific program with a new set of application processes and regulatory requirements. Complexity jumps. Costs go up. More people can’t afford a place to live.

We created a very busy intersection but we forgot to install a traffic light.

If the organizations who built the internet had adopted the approach we are taking in the affordable rental housing sector, there would be no internet. We would have 5,000 incompatible networks and 7,000 white papers telling us there is a problem.3

A Standard Operating Protocol For Affordable Housing

The lesson from TCP/IP is simple and powerful: A well designed system is essential to making things easier and less expensive to do.

We can create a system like this for affordable housing. A simple standard operating protocol that ensures the programs and policies we create are more compatible, efficient, and easy to use.

The First Principle: Cheaper, Easier, and More

If you walk into any emergency room or clinic in the United States, you know that our entire system of medicine is based on the fundamental principle that every doctor will “First, do no harm”.

Before creating TCP/IP, the early pioneers of the internet shared a first principle that whatever system they built would allow for data to move freely across all networks. “make it compatible.”

We must also adopt a first principle. One that will guide the development of every policy or program we create going forward. A shared commitment that every thing we do will first not make it harder or more expensive to create affordable rental housing. A principle that guarantees every new product or program we create will “make it easier and less expensive to do more.”

Six Basic Rules

One of the biggest mistakes we make when designing a system is believing we need dozens of rules to solve for every possible problem. But good systems don’t try to cover every scenario. Instead, they create a simple, standard protocol with a few basic rules that everyone agrees to follow - making it easier to work together, adapt, and solve problems as they come.

A standard protocol for affordable rental housing should include these six basic rules

1. Standardize Funding Applications: Housing developers waste a lot of time and money filling out funding applications for different programs that ask for the same basic information. We can create a common application that standardizes the core elements required for state, federal, and local governments funding programs, with additional sections that can be customized for specific programs. Having a common application would eliminate redundancy, improve efficiency, save money, and accelerate project timelines.4

2. Consolidate Redundant Programs: Funding programs with overlapping goals should be consolidated. Requiring developers to navigate multiple programs that fund the same activities or meet the same policy objectives increases the complexity and cost of creating affordable housing without yielding any additional policy benefits.5

3. Streamline Approvals and Compliance Requirements: Approval and compliance processes must be streamlined by eliminating duplicative requirements, standardizing forms across agencies, and embracing technology-driven solutions — including AI-assisted tools — to reduce review times and administrative burdens. A more efficient compliance system will support more housing production without compromising accountability.

4. Eliminate Obsolete Regulations: Regulatory requirements should be subject to regular review and eliminated if they are outdated, duplicative, or better addressed by other mechanisms. Preserving rules simply because “they have always been there” undermines system efficiency and diverts resources from higher-impact activities.

5. Design Programs for Users, Not for Consultants: Programs should be simple enough to navigate without requiring technical assistance. If a program needs a technical assistance program to explain it, redesign the program until it doesn’t.

6. Incentivize Efficient Production: Federal and state incentives should prioritize jurisdictions and developers that are able reduce costs and deliver affordable housing more efficiently. Incentives should reward those who make the most efficient use of taxpayer dollars to create more affordable rental housing.

Building A System That Makes It Easier and Less Expensive to Do More

A system can be well-designed, but it will not endure without the discipline to use it. Creating standard protocols is the easy part; the hard part is following them consistently, especially under pressure. Yet it is precisely in those moments that we must remember our first principles and let our standard operating protocol help us out.

We will never design a perfect program that solves the affordable housing crisis on its own. But we can build a system that makes good programs work better. We can agree to simple, shared protocols that make every state, local, and federal program easier, faster, and less costly to use.

The good news is that we have already figured out how to make affordable housing more expensive and complicated. If we can do that, then we also have the ability to make it easier and less expensive.

Cheaper. Easier. More. It begins with a system.