The homeless crisis in the United States is reaching epic proportions. Despite continued economic growth across almost all sectors, more than half a million Americans are homeless, and millions more suffer from housing insecurity along with other issues stemming from the high cost of housing. According to CityLab, there is not a single major metro area in the United States where one can rent a two-bedroom apartment on minimum wage and many others where you cannot even rent a one-bedroom or studio.
The inability to find affordable housing does not only affect low-income Americans- it contributes to numerous social ills, like environmental pollution from longer commutes, drug and alcohol addiction, crime and the blighting of our downtowns and urban cores. However, there is hope on the horizon. A new generation of developers are devising strategies to alleviate the homelessness crisis in the United States, including alternative development and funding models, micro-homes, and new techniques to expedite housing development that benefits everyone- not just top earners.
The real estate development industry’s role in the crisis
There is a multitude of reasons why we are in this mess. Zoning laws and NIMBYism have caused moderately priced construction to plummet. Social service programs throughout the United States have been consistently gutted since the late 1970s, and despite roaring economic growth, real wages and purchasing power for workers remains stagnant.
Developers have also contributed to the problem in a not insignificant way, by fostering a situation where the majority of new housing in many urban areas consists of Class-A luxury housing. This is out of reach for low-income earners and even middle-class workers. Many developers are also guilty of not embracing mixed-use residential and commercial districts, which can be more affordable and often can be built on non-traditional lots.
How some developers are facing the crisis head-on
While the industry as a whole is largely responsible for the crisis we face, many positive actors are working in new and innovative ways to solve the issue.
The size of the average American home grew from 1,660 square feet in the early 1970s to more than 2,700 square feet today. This trend towards larger and larger homes meant that neighborhoods became less dense by definition. More dense areas can house more people, more efficiently, not just in terms of house size, but in terms of utility and resource delivery.
Micro-homes and micro-home developments seek to reverse this trend by providing low-income and homeless citizens with an accessible way to get a roof over their heads. Right now, micro-home projects go against zoning laws in many areas of the country, but as the housing crisis grows more intense, there is a growing call to change zoning regulations to allow smaller homes. Cities like San Francisco, Los Angeles, Portland, and others have experimented with the use of these developments to increase the total number of homes available to the homeless in their cities.
City low-income housing subsidies
City officials across the country are desperate for a solution to this problem. And this presents an opportunity for civic-minded developers. In many areas, like Los Angeles, the city provides numerous tax and capital investment benefits to developers working in the low-income housing space. Traditionally, the Department of Housing and Urban Development was responsible for funding marginal and low-income housing, but as the federal government has stepped back, municipalities have picked up much of the slack.
These are just a few of the ways that developers are adapting to the challenge presented by the housing affordability crisis. Other approaches include seeking out alternative funding from crowdsourcing platforms, rehabbing older buildings, and developing on non-traditional lots. A plethora of factors created this crisis and determined developers will need to take multiple approaches to end it.