Discussion Paper

The affordable housing shortage: considering the problem, causes and solutions

Abstract: Many observers claim that we are in the midst of an affordable housing shortage or, even worse, an affordable housing crisis. The primary concern is that too many households live in unaffordable rental units. We hope to clarify the current debate by first measuring the size of the problem, then diagnosing its underlying causes and, finally, discussing treatments that policymakers should consider. While our review is hardly exhaustive, we conclude that a shortage of income is largely behind the housing affordability problem despite the current focus on housing. Policymakers should recognize that government financing of new housing units is unlikely to be a cost-effective response to low household income.

Keywords: Housing - Prices; Housing - Finance; Finance, Public; Housing;

Bibliographic Information

Provider: Federal Reserve Bank of Minneapolis

Part of Series: Banking and Policy Studies

Publication Date: 2002

Number: 2-02