The Affordable Housing Crisis

A Market-Based Solution

by Lauren Dreher

For decades, the affordable housing crisis has been a persistent issue in government offices, investor meetings, and industry conferences. Despite billions in funding, the core problems remain: rising costs, supply shortages, and inefficient programs that create more obstacles than solutions.

Meanwhile, the private sector has revolutionized real estate, from institutionalizing single-family rentals (SFR) to streamlining property management and financing. Yet, when it comes to affordability, we rely on outdated, bureaucratic models that continue to fail. It is time to stop treating affordability as a government problem and instead apply market-driven principles to make it scalable, sustainable, and investable.

The System Is Rigged Against Affordable Housing

Despite widespread calls for affordability, policies and financial structures actively hinder supply growth. The broader real estate industry has seen tremendous advancements in capital deployment and operational efficiencies, yet affordable housing remains bogged down by bureaucracy.

Take the Low-Income Housing Tax Credit (LIHTC), the primary financing tool for affordable housing. While it has funded millions of units since 1986, it is slow, inefficient, and burdened by compliance hurdles. A typical project takes five to seven years, delayed by tax credit allocations, financing gaps, and government approvals. Even worse, many LIHTC developments deteriorate due to underfunded maintenance, leading to displacement once restrictions expire.

Voucher programs, intended to help low-income tenants access housing, also fail due to excessive administrative burdens. Lengthy approval processes, restrictive rent caps, and inconsistent payments discourage landlords from participating, shrinking the available housing stock despite rising demand.

Zoning laws further restrict affordability by limiting density and driving up costs. Many urban land-use policies remain stuck in the past, favoring single-family development and blocking infill projects that could add much-needed supply. These outdated regulations, combined with local resistance, make affordable housing more expensive and difficult to build.

Instead of addressing these systemic issues, we continue relying on models that have consistently failed to deliver scalable, long-term solutions.

Why Government-Led Affordable Housing Has Failed

Government-led housing efforts have largely fallen short. Public housing, once seen as the answer to affordability, became a cautionary tale of mismanagement, neglect, and unintended consequences. Across the U.S., large-scale public housing projects deteriorated into crime-ridden, poorly maintained developments that had to be demolished or privatized.

Even in today’s public-private partnerships, reliance on subsidies and rigid regulations stifles innovation. Developers face strict cost structures and income restrictions that often do not align with market realities, leading to cost overruns, delays, and long-term viability concerns.

This is not to say the government has no role; public funding and incentives can be powerful tools when structured effectively. When the system prioritizes control over efficiency, however, affordability efforts become slow, costly, and unsustainable.