Expanding America’s Housing Infrastructure

Summary

There is a chronic shortage of housing in the U.S. that is driving up housing prices and making it more difficult for lower-income individuals to find safe, affordable housing. Housing production in the U.S. is not keeping pace with expanding housing needs. The underbuilding gap in the U.S. now totals more than 5.5 million housing units. The impact of this growing problem of an under-supply of affordable housing is far-reaching and undermines economic growth—particularly in urban areas.

Key Takeaways

Safe, decent, and affordable housing is critical to the well-being of America’s families, communities, and businesses. The COVID-19 pandemic intensified the nation’s persistent housing crisis and heightened the need to expand the supply of affordable housing.

Having a robust housing finance system is critical to meeting the nation’s longstanding goal of ensuring decent and affordable housing for all. Debate over reforms to the government-sponsored enterprises (GSEs) continues, but no legislative proposals are currently under consideration.

Confronting the housing crisis requires a national transformation in housing policy, including a strategic plan to expand the supply of affordable housing.

Policymakers should look at the full scope of tools available to bridge the underbuilding gap as part of this national strategy, including:

  • Yes In My Backyard (YIMBY) policies;
  • Property conversion incentives;
  • Reforms to zoning and permitting rules;
  • Reforms to the GSEs that continue to protect financial stability and access to affordable mortgages;
  • Extending and improving Opportunity Zones (OZs);
  • Enacting the Housing Affordability Act; and
  • Expanding the Low-Income Housing Tax Credit (LIHTC).

RER has partnered with 16 other national real estate organizations to jointly advocate for policies that will help to increase housing supplies, grow jobs, and modernize our nation’s critical infrastructure.

See the full fact sheet.

Position

Enact Federal YIMBY Legislation: Proposed legislation like the bipartisan Yes in My Backyard (YIMBY) Act would help eliminate discriminatory land use policies and remove barriers to production of affordable housing.

  • RER and 17 other national organizations submitted a letter in strong support of a version of the bill introduced in the 118th Congress, R. 3507.
  • The YIMBY Act requires recipients of certain federal grants to submit public reports about their implementation of specific land-use policies, such as policies for expanding high-density single-family and multifamily zoning.

Implement Property Conversion Incentives: The bipartisan Revitalizing Downtowns and Main Streets Act of 2025 (H.R. 2410) would create a market-based tax incentive for converting older commercial buildings to residential use.

  • By incentivizing residential conversions, the bill would help modernize U.S. real estate, create new and affordable housing, and strengthen cities and neighborhoods that continue to suffer from the aftereffects of the pandemic.
  • The bill would create a new and temporary 20 percent tax credit for qualified property conversion expenditures, modeled after the historic rehabilitation credit. The total credit authority would be limited to $15 billion, allocated by state housing finance agencies based on feasibility and impact.

Reform Zoning and Permitting Rules: Restrictive zoning and permitting rules create prohibitive barriers to constructing affordable housing and are exacerbating the housing crisis.

  • Exclusionary zoning policies, such as prohibitions on multifamily homes, constrain housing construction. Streamlining permitting and zoning processes can unlock new housing supply.

Extend and Improve OZs: Opportunity Zone (OZ) tax incentives have successfully mobilized private investment in historically underserved communities. Long-term extension and targeted reforms are essential.

  • Since their enactment in 2017, OZs have spurred billions in private investment to revitalize distressed communities, finance affordable housing, and create jobs. Under current law, the OZ tax benefits are phasing down and will expire altogether for new investments made after December 31, 2026.
  • 72 percent of U.S. counties contain at least one OZ. Recent estimates suggest OZs have attracted over $120 billion in capital.

Expand the LIHTC: The LIHTC is a critical federal tool for addressing the widespread lack of affordable rental housing. Expansions to the program are critical to maximizing its impact.

  • The 12.5 percent increase in LIHTC allocations to states will expire at the end of 2025 and should be extended.
  • Legislation has been previously proposed to strengthen the LIHTC, including the Affordable Housing Credit Improvement Act (AHCI), which would make it easier to combine LIHTC with other sources of capital, and the Decent, Affordable, Safe Housing for All (DASH) Act, which would offer a new Middle-Income Housing Tax Credit (MIHTC).

Pass the Housing Affordability Act: Senators Ruben Gallego (D-AZ) and Dave McCormick (R-PA) introduced the bipartisan Housing Affordability Act to expand the supply of affordable housing by increasing Federal Housing Administration’s (FHA) outdated multifamily loan limits.

  • Without this fix, most areas are misclassified as “high-cost,” limiting HUD’s ability to support new multifamily developments and deepening the national housing crisis.
  • If enacted, it will increase apartment construction, add supply, and help bring down housing costs, making housing more available and affordable for millions of American families.
  • The Housing Affordability Act has the broad support of a number of real estate industry organizations, including RER, NAHB, NAR, NMHC, NHC, NAA, IREM, NAHMA, NLHAC, NAHC, and others.
Background

The Underbuilding Gap

  • A persistent underbuilding gap over many decades has left the U.S. with fewer housing units than needed, leading to higher home and rent prices and lower affordability.
  • Housing supply was also significantly impacted by the Global Financial Crisis (GFC) in 2008 and disruptions caused by the COVID-19 pandemic. The construction industry was particularly affected due to higher labor and material costs, worsening the underbuilding gap.
  • Most of the new housing units in recent years have been single-family homes. Through the end of 2023, production of new single-family homes reached more than 1 million annually in 2022 and 2023 for the first time since the housing bubble burst in 2007.
  • Apartment construction is also at historic levels, with 438,500 units built last year, the highest level since 1987. The number of apartments under construction at the end of the year, about 981,000, was an all-time high since the survey began in 1969.
  • With no change in current housing policy, we can expect annual production of approximately 1,515,000 units, including an estimated 1 million single-family units, some 440,000 multifamily units, and approximately 75,000 manufactured homes. Yet, even at the current pace, this level of production remains far below the 5.5 million housing units the U.S. is currently estimated to need.
  • A quarter of American renter households spend more than 50 percent of their income on housing expenses. More than 10 million low-income households spend more than half of their monthly income on rent, according to Harvard’s Joint Center for Housing Studies.
Resources
MORE ISSUES
MORE ISSUES
Expanding America's Housing Infrastructure
Property Conversions and Housing Tax Incentives
GSE Reform and the Housing Finance System
"YES In My Backyard" (YIMBY)
IRS Limitations on Private-Activity Bonds (PABs)
Surplus Federal Real Estate for Affordable Housing