The Future of Housing: Seeking Clarity in Times of Uncertainty


By Jillian Olinger and Christy Rogers

For over fourteen years, The Kirwan Institute has been dedicated to understanding opportunity and marginalization—why and how some groups are consistently disadvantaged, despite their hopes for a shared, just future. In the aftermath of a vitriolic election cycle, many of us are anxious about how we can build better lives and communities together. The national, state and local sense of fast-paced disruption and change have forced many of us to take an unvarnished look at where we are, what our values are, and how we translate those values into policy. This is true for so many areas of individual and community life. As housing researchers and advocates, we are thinking hard about how to move our housing policy research and advocacy work forward in a time of deep anxiety and uncertainty.

As Kirwan Institute colleagues, we have long advocated for a fair and equitable toolkit of housing policies, and we have waded deep into the weeds of policy specifics. We are versed in the duty to affirmatively further fair housing, the mechanics of the secondary mortgage market, and the local vagaries of housing conditions in order to develop equitable solutions. But right now, we feel an urgent need to reaffirm what we think housing, and housing finance, is for. A house is intended to house. People want and need a safe and affordable place to call home.

Home. That one word encapsulates so much in American society. Home is one of the cornerstones of opportunity, of pursuing and achieving a fulfilling life. Secure and affordable housing (and neighborhoods rich with opportunity) matter fundamentally—for our healthy growth and development. This link is most pronounced for children. Neighborhoods in distress pose formidable barriers to healthy child development, producing stressors that can significantly impair children’s psychological and physiological health (including skills development, and capacity to learn and thrive).[i] In terms of economic growth, the ability to find and keep affordable housing impacts individual bottom lines (the ability to grow and draw on equity, for example), and our national bottom line. The lack of affordable housing in large cities such as New York and San Francisco limits our country’s economic growth by limiting the mobility of workers to re-locate to cities with higher wage positions. Statistical models estimate this potential added growth in affordable housing stock would correlate to a 9.5% rise in the national GDP.[ii] When “done right,” a home provides shelter, safety, security. It meets personal physical, mental, and emotional needs. It is a foundation of growth, not just for today, but potentially for generations. And in our society, for many reasons, home is linked inextricably with opportunity. Home locates us in relation to community, schools, polling locations, grocery stores, parks, transportation hubs, banks, restaurants, sports, and work. When housing’s importance to people and to communities is ill attended, our educational, economic, and health can be compromised as well.

We fear we are losing sight of the fundamental opportunity promise of Home, and that the literal ‘bedrock’ of American equity is being further eroded. The current racial wealth gap is due to differences in home ownership, according to a study at Brandeis University: “the number of years families owned their homes was the largest predictor of the gap in wealth growth by race.” The current racial wealth gap is the largest it has been in 25 years.[iii] Despite the continuing importance of homeownership to wealth- building, and despite the fact that housing remains the single largest asset held by most Americans,[iv] there was scant mention of a housing agenda in the presidential election primaries and debates. Meanwhile, more Americans than ever feel their grasp on housing—whether owner or renter— is increasingly tenuous. In a 2016 How Housing Matters survey conducted by the MacArthur Foundation, 81% of Americans believe that housing affordability is a problem in America (of that, 60% say it is a serious problem), and over half (53%) of respondents reported making a sacrifice in order to cover their rent or mortgage in the last three years. Further, 34% report that they know someone who has (or have themselves) been evicted, foreclosed upon, or lost their housing in the past five years. An estimated 6.3 million home purchase loans were “missing” between 2009 and 2015 due to tighter credit standards, and yet we are seeing a housing supply fall short of demand by 431,000 housing units. Housing insecurity and the anxiety that provokes is real and it is prevalent.

We need to be clear upfront: we are still experiencing a severe housing crisis. This is especially acute for our rental households. Today, a staggering one in five of all renting American households spends at least half of its income on housing. Evidence of this largely silent epidemic is plentiful. Households have been experiencing growing economic insecurity for decades, even generations, now. In 2010, median American household income adjusted for inflation was $49,445—an amount equal to what families made in 1989. Wage stagnation has become the norm—except for the top 1% class, that is—even as American workers have become more productive. In turn, housing cost burdens are crushing households. In nearly every state, median rents (up 4% since 2007 nationally) have far outpaced growth in incomes (down 7% nationally) since before the recession. Homelessness is widespread in many communities across the country. Indeed, the “profile” of the homeless is shocking: in our hometown of Columbus OH, an analysis of shelter clients from 2010–2013 found that this cohort had greater means than clients in the past. They had twice the employment rate and higher income.[v] How can we, as American citizens committed to equal opportunity and justice, accept such realities in our communities?

The American Dream often rests on the notion of a stable home, of providing shelter and security for one’s family today and (hopefully) generations to come. But, does our national policy actually reflect and support this most critical function of housing, to house families? Where, in practice, are our resources devoted? If we are judging the success of our national policy on whether it is supportive of the vast majority of Americans, then we are indeed faltering. As Matthew Desmond so brilliantly and painfully outlined in his ethnography Evicted, our housing policy is dangerously close to being one of exploitation and extraction, giving priority to corporations, secondary market investors, and high income households. Instead of expanding housing aid to American families in need today, our assistance is over-directed to tax expenditures for the affluent. Meanwhile, 2 out of 3 poor renting families receive no housing assistance whatsoever.[vi]

Over time, housing has taken on many functions aside from shelter. It is a key means to build wealth. A neighborhood development anchor. A tax deduction. An asset that backs an investment. None of these are unimportant, and we think we can—and should—balance multiple goals successfully. But we have to remember, or perhaps see with renewed clarity, that housing is at its core an emotional, psychological, social, and material comfort for people and for families. This has to come first. It doesn’t have to come at the expense of all the other useful functions that housing serves. But in our view, those other functions—as part of an investment portfolio, as a tax deduction—should not come at the expense of the well-being, or even the lives, of people. Homelessness, foreclosures, abandoned homes, and evictions are the mark of a deeply flawed housing system, and people are paying the price.

Frankly, while the conversation on national housing policy priorities ebbs and flows, this doesn’t mean we don’t have a national housing policy or that our priorities as a country aren’t clear. A quick look at federal spending tells us what has risen to importance over just the last ten years. In our quick review, what we find is that our housing policies prioritize the following: reduce income taxes, assist low-income families with rental costs, manage the flow of mortgage credit, and provide block grants for community housing needs. These goals are fine, but do we have our priorities in the right order? The tax reduction function costs more than the other three enormous priorities added together.

According to our “big ticket” federal budget items, the #1 priority for housing finance policy is to reduce personal and corporate income taxes, to the tune of about $139 Billion in 2015.[vii] And yet, the reach is not as deep as one would expect for such a big ticket item: in 2012, for example, 77% of the mortgage interest deductions claimed were by homeowners with annual incomes greater than $100,000, while many moderate and low-income households failed to receive any benefit from the deduction.[viii] Does this make sense?

The next highest priority from Federal sources is the Department of Housing and Urban Development’s (HUD) funded rental assistance (including tenant-based and project-based assistance), totaling about $28.5 Billion in 2015. [ix] This is roughly one-fifth of the costs of tax reduction. When we consider the growing stress in our rental markets and the cost burdens faced by renters, we must question whether this remarkable imbalance with the tax deduction cost is justified.

We know that housing and neighborhood environments are fundamentally important for successful outcomes. This holds true whether we are considering individuals, cities, regions, or the nation. The most direct sightline between the federal government and policy in this regard is through HUD. Yet an agency tasked with the enormous responsibility for bringing housing security in reach for millions of American renters and homeowners, investing in opportunity-based community development, and protecting and advancing the civil rights of protected classes under the Fair Housing Act has a roughly $40 billion budget to work with, a fraction of the tax deduction cost.[x] Housing needs have continued to outpace the federal resources available to meet them. For example, the FY2015 appropriations for the Community Development Block Grant program (one of the largest sources of federal funding allocated to states and localities for low-to moderate-income community development) were at one of the lowest funding levels in fifteen years ($3.06 billion). From FY2000 to FY2014, the average grant allocated to entitlement communities declined by 44%.[xi]

Our task now is to ask whether spending, in fact, aligns with our priorities. As advocates, we are in error if we assume that others, in policy-making positions or not, understand and share the value we hold that housing is, first and foremost, about people. Because if this was in fact true, if this value was widely shared at the highest levels, than we would not, for example, have evictions being processed in less than a minute in courtrooms. Rising rents would not be pushing families into homelessness because we would have a balanced tax policy that benefits renters as well as homeowners.

So, how could we put housing people first?

First, we’re not reflexively opposed to reducing income taxes, but perhaps there is a more direct and effective way to do this, rather than the indirect means of a deduction. We understand that the conceptual idea is that the mortgage interest is not “taxed” twice, but maybe we could achieve the same goal by giving tax breaks to lenders who lend at low rates. Or maybe it doesn’t have to be quite so big—if we reduced the mortgage interest tax deduction by just 10%, we could easily expand other proven housing assistance programs (CDFIs, homeless prevention programs, vouchers) tenfold. There has been much sensible thinking on reforming just this one aspect of our housing policy that could reach many millions more American families. Matthew Desmond suggests the bold proposition of a universal voucher system for all low-income families.[xii] Borrowing analysis conducted by the Bipartisan Policy Center, he estimates such a program could increase spending on housing assistance to $60 billion.[xiii] As we outlined above, we have the resources. It’s a matter of re-prioritizing, which means it is a political issue. Which means we all must be engaged in the conversation and that the conversation remains focused on what matters: housing people.

Second, the Treasury Department profited from its housing-related investments. Where will these profits be reinvested? Treasury’s involvement in the housing finance market is a new (and newly profitable) venture for Treasury: it only began purchasing securities in 2009, in order to help stabilize the market after the subprime lending and foreclosure crisis threatened the world economy.[xiv] Why not reinvest those profits in housing for veterans or the elderly? Why not fair housing enforcement? The subprime lending and foreclosure crisis that led to Treasury’s need to step in (and later, to enormous bank fines, much of which went to Treasury) could have been mitigated by serious efforts to provide for fair lending rates and meaningful neighborhood choices for all families.

Third, we understand the importance of paying bills on time. But other long-term payment schedules have flexibility to account for what often drives people into foreclosure – divorce, job loss, disability, and medical debt. Students who take out loans for college can ask for temporary forbearance, align payments with their income over time, and choose various repayment time tables (and change them repeatedly).

These are just a few of the many possibilities out there. What we can no longer stand for, however, is this skewed relationship with housing that puts the primary function of housing—as shelter first—too far down on the priority list. Being silent on the absurdly lopsided nature of our national housing policy is no longer acceptable. This foundational asset is still grossly unevenly distributed in our society. We cannot make meaningful inroads on closing the racial wealth gap, for example, if we don’t ensure fair housing and fair credit opportunities. We all have a stake in and a responsibility to re-orient our thinking. We are in a moment of great change, and while there is a deep sense of anxiety, there is also a great opportunity for stepping back, taking stock, and bringing renewed clarity to the central principle of housing: to house, to shelter, to secure. We have the chance to think big, think creatively, and widen the circle. Yes, we know that the details of any of these possibilities are important: the weeds matter! So yes, we need to continue to be in the weeds that so often has been the advocates’ place: for example, watchdog over consumer protections and financial regulations, or fighting to preserve the assistance that already exists. But we cannot forget the guiding principle: does this policy or program help keep people in homes? If yes, do more of it! If not, we have some more thinking to do.

This is our open invitation to join us as we seek clarity for housing in times of uncertainty, as we strive to re-assert that most fundamental promise of Home.


[i] See M.A. Turner and D. Acevedo-Garcia. “Why Housing Mobility? The Research Evidence Today,” Poverty and Race Research Action Council Newsletter 14 (January/February 2005).

[ii] Capps, K. (2015). NIMBYism is a huge drag on America’s economic growth. City Lab. Retrieved from…

[iii] Explaining the Black-White Economic Divide. “Tracing the same households over 25 years, the total wealth gap between white and African-American families nearly triples, increasing from $85,000 in 1984 to $236,500 in 2009.”

[iv] Federal Reserve Bulletin, September 2014. Volume 100, No 4. Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances. Jesse Bricker, Lisa J. Dettling, Alice Henriques, et. al. See Table 3. “Holding and values of assets, 2010 and 2013 surveys

[v] “Examination of Homelessness in Columbus/Franklin County, Ohio: 2010-2014,” ABT Associates. Prepared for the Community Shelter Board and The Columbus Foundation. July 2015.

[vi] Desmond, Matthew. (2016). Evicted. New York: Crown Publishers. Page 303.

[vii] The 2015 “costs” to the government (in terms of foregone tax revenue) include the mortgage interest tax deduction at $71 Billion, the real estate property tax deduction at $32.4 Billion, and the capital gains exclusion on sales of principal residences, at $24.1 Billion. If we add in the reduction in corporate taxes through Low Income Housing Tax Credits (the largest source of investment in the production of affordable housing; it serves a dual role), this adds another $7.3 Billion. Depreciation of rental housing in excess of alternative depreciation system costs another $4.2 Billion.

[viii] Wealthier homeowners carry larger mortgages and thus have more interest eligible for deduction; the amount of the eligible deduction increases in step with a household’s marginal tax rate; and many lower-to-middle income homeowners do not itemize their deductions. See Will Fischer and Chye-Ching Huang, “Mortgage Interest Deduction Is Ripe for Reform: Conversion to Tax Credit Could Raise Revenue and Make Subsidy More Effective and Fairer” (Washington: Center on Budget and Policy Priorities, 2013), available at

[ix] Federal Budget Outlays retrieved January 10, 2017 from Office of Management and Budget, Public Budget Database, at ; see PUBLIC BUDGET DATABASE USER’S GUIDE, Budget of the United States Government Fiscal Year 2017. Prepared by: Budget Analysis Branch Office of Management and Budget February 2016 for more information. Authors rounded to nearest hundred million for budget comparisons in the billions.

[x] HUD offers mortgage credit through its FHA program at the cost of $15 Billion. HUD Community Development Fund offers about $6.5 Billion to community development; $1.9B to homeless assistance grants; $1.2 B in HOME block grant for affordable housing for low-income households[x]; $773 M to elderly housing; $70 M for community development (NSP); and $65 M to Fair Housing enforcement.

[xi] Boyd, Eugene. (February 6, 2014). Community Development Block Grants: Recent Funding History. Congressional Research Service.

[xii] Desmond, supra n. 7

[xiii] Id. at 311. In 2013, the BPC estimated that expanding housing vouchers to all renting families below the 30th percentile in median income in their communities, and require an additional $22.5 billion.

[xiv] Interestingly, the next largest “big ticket item” on the Federal books pertaining to housing is not a cost. Net profits to Treasury from GSE equity related transactions and G-fees in 2015 totaled about $22.7 Billion. We certainly don’t want to demonize Treasury’s GSE purchases; at the time, they were considered a high-risk, last-resort action. One can only imagine what would have happened if the secondary market collapsed entirely. Ongoing Treasury housing assistance in 2015 included $4.2 B to TARP, the “Troubled Asset Relief Program” ($23.3 B was spent from 2009-2016 inclusive; costs are forecast to continue, but decline.)[xiv] Treasury investments in affordable lending made through their system of CDFIs cost $226 M (with projected similar amounts in 2016 and 2017).