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Tuesday, August 16, 2022

Governments need to encourage more affordable housing locally

Carlos Curbelo

Miami faces a growing housing affordability crisis: the Magic City ranked first in the nation in rent increases in 2021, with median increases over the prior year of nearly 50 percent.

And the median-priced single-family home in Miami-Dade County is unaffordable to 82 percent of its residents.

In a sense, Miami is a victim of its own success. Thriving, exciting, and dynamic, the city is attracting people from all over the world, but the supply of housing hasn’t kept pace with the demand. The lower the supply and the higher the demand, the higher that prices for both homes and apartments will go. Miami’s housing affordability crisis is, then, really a housing supply crisis.

The problem may be acute in Miami, but it’s part of a broader national problem that’s having a particularly harmful effect on low-income families. Across the country, about 70 percent of the lowest-income renters spend more than half their incomes on rent, and they face a shortage of nearly 7 million affordable and available rental homes.

For Miami and other communities, a robust response at the local, state, and federal levels will be necessary to meet the housing affordability challenge.

Affordable housing is not a new concern of Miami’s leaders — who, laudably, have been working in recent years to address the problem. The city has collaborated to map underutilized land ripe for new housing, dedicated new funding to build more resilient and affordable housing, and advanced an Affordable Housing Master Plan, which is helping preserve the existing housing stock; invest in small and mid-scale multifamily housing development, and focus on mixed-use, mixed-income development.

At the state level, Gov. Ron DeSantis has proposed, and each chamber of the legislature has passed, measures to support more affordable housing. The issue now is money.

DeSantis has proposed $355 million, the Senate approved $337.7 million, and the House approved $268.1 million.

These initiatives are a step in the right direction.

Yet to help Miami and other communities with skyrocketing housing prices and a growing shortage of affordable housing, the federal government must also do its part. Fortunately, broad bipartisan support is coalescing around a number of steps on the “supply side” to address the problem.

Support is growing, for instance, for expanding the Low-Income Housing Tax Credit, the largest and most effective federal program to encourage the development and rehabilitation of affordable rental units. The tax credits are designed to cover the difference between the costs of developing a rental property and the income that developers will receive from low-income units. Greater funding for the credit would mean more construction and rehabilitation of rental housing.

Policymakers should also enact the bipartisan Neighborhood Homes Investment Act, which would create a new tax credit to finance the rehabilitation of single-family homes. By incentivizing private investment to build and rehabilitate homes in distressed neighborhoods, this tax credit would promote first-time homeownership and help close racial and ethnic gaps in homeownership rates.

In addition, there’s bipartisan support to reform the Housing Choice Voucher program, which helps families cover the rent of private, market-rate units. Vouchers have proven very effective in keeping families stably housed and improving economic opportunity for those that use them. Policymakers should enact commonsense reforms to encourage more landlords to participate in the program—such as those proposed in the bipartisan Choice in Affordable Housing Act.

Finally, the federal government can incentivize state and local governments to reform land use policies, which may unnecessarily limit the supply of affordable housing, such as by rewarding communities that eliminate their restrictive policies while reducing funding to others that do not.

Housing is more than a growing need. It’s foundational to a growing economy and a healthy society. A city like Miami cannot thrive over the long term if it lacks housing for the workers it needs. Without more local, state, and federal action, the problem will worsen here and around the country.

Carlos Curbelo, a former member of the U.S. House of Representatives, serves on the Advisory Committee of the J. Ronald Terwilliger Center for Housing Policy.

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