(Created for housing and community stakeholders by Erik Kingston, PCED, IHFA’s Housing Resources Coordinator)

The housing ecosystem: economics and equity. In general, an ecosystem is defined as ‘…a complex network or interconnected system.” A healthy housing ecosystem—much like a healthy forest or market—contains a diverse mix of complementary species or forms that fill different niches. Monocultures are more vulnerable to changing conditions; both farmers and investors know the risks of relying on a single crop or stock.

We need housing for the diverse mix of people in a community, from producers to consumers, and across the spectrum of skills, needs and abilities.

Expanding housing choice has benefits far beyond fair housing compliance and civil rights; housing diversity is equally important for community and economic development strategies. Housing types and price points that reflect the needs and incomes of all community residents support a more stable labor force and educational system, reduce social costs of poverty, and lead to economic prosperity for all of us.

In other words, a functioning ecosystem.

Conversely, housing speculation and inflation that drive prices up and tenants out—assisted and magnified by NIMBY opposition to new residential development or density—create externalized costs that are shifted to local taxpayers, employers, consumers and communities. And creating vast low-density subdivisions separated from activity, retail and employment centers expands dependence on cars, shifting public investments from people and placemaking to roads and parking infrastructure.

And a lack of housing within reach of workers drives demand for wage increases and leads to business contraction and overall inflation, which impact all residents.

“Housing that is affordable to a range of incomes serves as a perpetual wage subsidy to local employers.” — Dr. Peter Dreier

Supply and demand. Strictly speaking, the laws of supply and demand don’t apply equally to housing and things like oil or corn. Standard commodity prices can respond to market shifts in hours, days or weeks, while housing prices change over years—owing to the lag time involved in building and permitting enough inventory to change demand for tenants. But just like oil and corn, housing relies on taxpayer supports to make it seem affordable. And that boils down to policy priorities.

How to make housing ‘affordable’

Increase wages indefinitely to subsidize real estate speculation—this in turn fuels overall inflation in goods and services
Increase taxes to subsidize employer and consumer costs—through housing choice vouchers and development incentives that keep rents low for essential workers (who do not earn a living wage)
Re-imagine housing, since many Americans are choosing more affordable lifestyles simply by thinking differently about their housing needs. For some, small-footprint residential options—cottage homes, ADUs, Tiny Homes, courtyard apartments, residential hotels, etc.—are the answer. For others, expanding the definition of household to include housing cooperatives and home sharing that reduce costs and create a sense of community works best. Housing has never been a ‘one -size-fits-all proposition.
Eliminate low-density zoning and policies that exclude the distribution of diverse housing types and price points throughout our neighborhoods and community. Allowing modest density by right means local developers are able to create small-footprint, modest density residential without the delays and cost overruns created by NIMBY. That allows essential workers to ‘rent local,’ which keeps their wages and incomes circulating in the local economy.

Beyond these approaches, conditioning permits on some lasting community benefit—such as deed-restricted housing—serves diverse incomes. But when neighbors consistently reject distributed residential density and diversity (competition for tenants), landlords can increase rents unchecked.

Smaller local developers proposing medium density or mixed-income housing operate on slim margins; they are often unable to overcome NIMBY-driven delays and hurdles. This leaves most housing development to larger (often out-of-state) corporate developers with significant capacity and legal teams to drive the housing market.

Beyond speculation and NIMBY, the net costs of housing are influenced by transportation, energy, land, construction, regulatory and financing factors. In some rural Idaho communities, workers must often commute long distances to find housing within their budget, while the cost to heat or cool inefficient housing can exceed rent in some cases. So we created the ‘T.R.U.V. (Transportation + Rent + Utilities +Visitability) Index’ to reflect real-world cost considerations.

Location, location, location. Housing costs are driven by land costs, but the value of land is dependent on its proximity to publicly-subsidized infrastructure, water, assets and resources. A building site in a roadless area without services or water is valued less than a site near libraries, schools, health care and high-speed broadband. Learn more here.

One could also make the argument that the value of a neighborhood reflects the people who make that neighborhood livable, safe, provisioned and maintained. In that way, essential workers provide a subsidy to the value of our homes and community when they sacrifice time, health, safety, and opportunity by commuting long distances or living in substandard, overcrowded, or unhealthy housing—or are unhoused.

Housing myths. Here are a few actual quotes from policy makers over the years:

“The market will take care of our housing needs.” If this were true, we wouldn’t be in a housing crisis and everyone would have stable, affordable and quality housing near employment, education, health care and transit. Most private developers are in business to make money, and investor returns trump tenant interests.

“Affordable housing means more crime and undesirables.” The design and use of public space, lack of education and employment opportunities, and social inequality can influence crime; density or income are not predictors of criminal activity. Modern multifamily or other mixed-income housing developments are well-designed, well-constructed and well-managed. Those units typically house tenants who are already part of our communities—essential workers, families, students, seniors and people with disabilities—who are currently cost burdened or living in unstable or unsafe housing.

“We only want high-end housing, because it pays for itself.” In reality, the reverse is often true. When individuals and families are housing cost burdened (paying more than 30% of household income towards housing costs), which results in foregone or crowded-out spending. This is money that would otherwise be invested in taxable goods and services, and spent on food, education, healthcare, and self-reliance. Cost-burdened households are more likely to rely on public assistance. In 2022, Idaho lost an estimated $1.05B to foregone spending tied to housing cost burden.

The estimated loss to Idaho’s economy and tax base from housing cost-burdened households. Source: Colorado Futures Center

We hope to update and expand tools and resources below to be more useful to policy makers and housing stakeholders. These data can help inform a larger statewide housing needs assessment and resource allocation process. See also “2022-2027 AI What cities and counties should know about fair housing ‘ for additional information from the 2022 Analysis of Impediments.

Resources and references

Assessing Housing Markets Needs

Housing Market Overview Idaho > Current Version
Workforce Housing Business Leader Survey 2023
Housing-Needs-Assessment

County data sets for demographics, poverty and housing/transportation cost burden.

*The contractor for the 2014 version based ‘cost-burden’ data on the American Community Survey, while the contractor for the 2018 release used cost-burden estimates from HAMFI and CHAS data, a subset of the ACS estimate.

Redlining, Exclusionary Zoning and Density Considerations

NEW! Top code reform priorities for the housing crisis 03.28.2023

A widespread shortage of affordable housing is causing local jurisdictions to amend their land-use regulations. Here’s a list of 10 highly effective reforms, with notes on why they are needed. https://tinyurl.com/2lfrqw63

“…redlining as a practice was technically barred with the passage of the Fair Housing Act and Housing and Urban Development Acts of 1968. Yet even after redlining was made illegal, policies such as residential zoning laws and the development of a credit score continued inequality in housing markets.” —Urban Institute: Assessing the legacies of historic redlining