How the ‘Housing Trap’ Keeps Housing Unaffordable

Outlining lessons from his and Daniel Herriges’ recent book Escaping the Housing Trap, Charles Marohn of Strong Towns calls out the “financialized approach to housing, a top-down system that has disconnected housing prices in nearly all American cities from local reality,” pointing out how the focus on ‘affordable housing’ sometimes obscures the ways we could make housing more affordable for all.

Pointing to a project in Brainerd, Minnesota that received what amounted to $154,500 in public subsidies per unit (“in a city where the median home price is $210,000”), Marohn writes that “No matter where your heart is on building affordable housing, you have to acknowledge that there is no way this approach scales.”

According to Marohn, “The reason housing prices are crazy everywhere at the same time isn’t because every local market has the same supply constraints. Supply constraints exist in many markets, sure, but the story of housing affordability is primarily a financial one.”

But there is hope: “Cities can make it easier to build these kinds of products through regulatory reform. They can cultivate a cadre of incremental developers to do this kind of work. And, perhaps most importantly, they can help finance these entry-level units, providing local competition to the federally subsidized, Wall Street-based housing market. They can do this all at scale and at very little, if any, cost to local taxpayers.”