Emily McGinnis

The Affordable Housing Crisis — An Imperative for Business Model Innovation

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The United States is facing an affordable housing crisis in almost every county, and it is only getting worse. Attempts to remedy the problem are proving too narrow, which means it may be time to re-frame the issue. We believe it is critical that we seek more comprehensive solutions based on a systematic analysis of citizen experience, and to create new models for addressing this crisis better aligned to the realities and needs of those facing it.

As a recent CityLab article reports, “nationwide, only 21 units are available per 100 extremely low-income renter households (those earning below 30 percent of the area median income) without government assistance. With assistance, it’s 46.” The US Department of Housing and Urban Development (HUD) reports that “families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care.” Prioritizing any of these other necessities over housing could then leave them at imminent risk for homelessness.

Currently, there are:

·       An estimated 12 million renter and homeowner households who spend more than 50% of their annual incomes on housing.

·       Over 1 million people served by HUD through emergency, transitional, and permanent housing programs a year.

·       About half a million citizens who experience homelessness in the US on any given night; a number that could rise as high as 2 million over the course of a year.

This is a crisis that directly impacts millions of US citizens, and indirectly affects millions more. But what is causing it?

A recent Urban Institute report attributes the affordable housing crisis to two factors — rising rent prices and rising demand for affordable housing since 2000, as a greater number of people seek to rent. The struggle to find an affordable place to live is gravest in urban areas, where levels of homelessness are consequently highest. In some cities, buildings offering affordable housing have waiting lists in the hundreds before construction is even complete.

There is a crisis to be found here, for sure, but are we framing its solution all wrong?

Many reports would lead us to believe that the housing crisis is merely a supply-side issue — that there is simply not enough affordable housing to go around. However, other statistics like rising rates of inequality and stagnant wages in the US suggest that there might be other factors at play. In forging solutions, it is vital to ask the individuals, couples and families affected by the crisis more about their experiences, as there is always more to their stories than siloed numbers and isolated stats. What institutional leaders aspiring to holistically address this crisis really need to do is to shift their perspectives for solving the problem, to view it not only through segmented data and reports, but across sectors and from the lens of those actually struggling to make ends meet and tasked with the ever growing challenge of finding and maintaining a sustainably affordable place to live.

Here at the BIF, we work towards systems level change because we know that point solutions, such as increasing the supply of housing, are not enough. Throwing more housing options at a low-income community facing an affordable housing shortage might seem like an easy fix, but it doesn’t get at the complexity of the problem — such as deeper-seeded factors that may limit income to begin with, or pose barriers to access. It won’t tackle the root causes of the problem.

BIF's Design Methodology

In order to effect systems-level change, we need next practices and agile new business models that we can network together across silos and sectors in a way that can shift and adapt to ever-changing contexts. In our messy, volatile world, the conditions that lead to pressures on housing and other basic needs are ever evolving and we need networks of public service models that can also evolve and shift to continue meeting the changing needs of citizens, and the myriad challenges they face, over time.

We need:

flexibleadaptable, and agile public services,

truly designed to meet citizens where they are and when they need them — whether confronting homelessness or any other calamity, ideally well before a crisis takes hold in a way similar to how the affordable housing shortage has imperiled American citizens nationwide.

Citizens in need are waiting, and we can surely do better if we take the time to co-create new models, based on human experience, together!

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