New York City Mayor Eric Adams is facing a lawsuit from the Legal Aid Society and City Council for failing to implement laws that would expand a voucher program for low-income renters. The City Council overrode Adams' veto to enact the laws, which he claims lack proper authorization. Though predictable, the legal drama reflects a fault line in the housing affordability debate: should policymakers prioritize offsetting high costs or increasing overall housing supply?
Housing subsidies, in the form of vouchers and construction of subsidized affordable housing, transform lives and help millions of Americans avoid homelessness. The average person who supports housing subsidies, perhaps as an alternative to zoning changes, might believe that sufficient public funding of affordable housing would largely solve their region's housing crisis.
Yet subsidies have two major limitations. First, they are expensive. Increasing subsidies to match the scale of the housing crisis would cost tens or hundreds of billions of public dollars—well beyond what is politically realistic in most of the U.S. Second, subsidies might exacerbate the problem. Injecting that much money into the housing market risks further increasing prices by boosting demand while supply remains limited.
Our massive housing shortage demands a combined approach. Reforming restrictive housing regulations will make subsidized housing easier to build while enabling private construction of millions of homes, reducing rents. That will make vouchers much more effective for those who need them.
As a rule, "affordable housing" refers to committed affordable housing, which is income-restricted for multiple decades. That means people can only move in if their income is below a certain level. Financing the development of this so-called "capital-A Affordable" housing is incredibly complex and usually relies on subsidies from different levels of government.
Some back-of-the-napkin math can help us put affordable housing in the larger context of the housing crisis. A report from Up For Growth estimated that the D.C. metro region, where I live, had a shortage of 156,597 homes in 2019. That estimate might be low, plus the pandemic made our housing crisis much worse, but I will round down to 150,000.
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An optimistic estimate of the typical cost of building one affordable housing unit in the D.C. area is $400,000, though the true cost can be much higher. So addressing only a quarter of the D.C. region's housing shortage with subsidized units would cost roughly $15 billion, comparable to D.C.'s entire $19.8 billion 2024 budget. The Low-Income Housing Tax Credit, by far the largest federal affordable housing program, spends about $9.5 billion annually.
Only dramatically expanded or entirely new funding sources would produce that $15 billion for affordable housing in the D.C. region (setting aside the rest of the country). It would be a much tougher political fight than the extremely tense negotiations to fill a $750 million budget gap to sustain our heavily used regional transit system.
And if we secured the $15 billion? Some of it would go toward building 37,500 homes in the D.C. region, reducing the housing shortage. But to the extent the subsidies increased demand for housing, they would also increase prices. Vouchers have the same effect. Landlords would notice that they can charge more.
On the most basic level, a subsidy increases demand. Pouring more money (from any source) into the housing market without fixing the underlying shortage of homes raises prices. Even highly respected left-leaning housing economists highlight that risk.
As the saying goes: more money, more problems.
Almost anyone who has recently searched for an apartment or tried to buy a home can tell you that we face a shortage of places to live. We need inventory, which means we need to build a lot more homes, if nothing else. Zoning reforms designed to unlock housing production have been enacted from California to Montana and are being debated in statehouses nationwide.
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Encouraging the construction of many non-subsidized homes will ultimately increase supply and reduce prices, which will make housing subsidies more effective in two ways. First and foremost, the limited amount of money we are able to spend on subsidies will be able to help more people avoid homelessness.
And second, we will be able to spend less on "workforce housing" programs that benefit households making between 60 percent and 120 percent of local median income. Folks who make that much money should expect to afford housing without a subsidy. We must allow the market to build the homes that will allow teachers and first responders to live in the communities they serve.
Luca Gattoni-Celli is a Young Voices contributor and the founder of YIMBYs of Northern Virginia. Read more at lucagattonicelli.substack.com and follow him on X @TheGattoniCelli.
The views expressed in this article are the writer's own.
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