When many of us think of infrastructure, we think of the physical things that connect people to everyday necessities: bridges, roads, cars, powerlines, and so on. However, housing in America is an often overlooked yet crucial part of what makes up infrastructure.
Aii defines infrastructure as the physical systems and structures that facilitate transportation, transmission, distribution, and storage for people, resources, energy, information, and goods. Using this definition, housing is an undeniably key part of infrastructure. It is important to note that housing encompasses not just houses but also apartments, condominiums, and co-operatives.
Housing determines access to essential resources, such as public transportation, education, the Internet, and job-rich areas. It also has significant environmental impacts: families living far from public transportation lines must endure long commutes, increasing car usage and carbon emissions. Housing is also a cornerstone of economic stability, as homeowners benefit financially when their property’s value appreciates over time.
Currently, the U.S. faces a housing shortage, as both property values and the population increases. In the U.S., it is expected that housing costs should make up 30 percent of an individual’s gross income. Recent data shows the median home sale price rose from $211,000 in January 2017 to $344,000 in October 2023. According to Redfin News, only 16 percent of home listings in 2023 were affordable for a typical household. In 2021, the Department of Housing and Urban Development reported that 9 million people in the U.S. used subsidized public housing, but the actual number of people who cannot afford their homes is likely much higher.
The numbers reported by Redfin reflect a disproportionate increase in housing prices with residents’ incomes. Rising interest rates and a lack of new construction since the 2008 housing crash contribute to this inaffordability. Consequently, permanent and owned housing is becoming increasingly unattainable, leading to economic instability, forced evictions, and homelessness. As homeownership is one of the primary ways to build wealth in the U.S., this issue demands urgent attention.
The production of affordable housing is one way to address this shortage. It is generally defined as housing which does not exceed more than 30 percent of the resident’s income. Often, it involves fixed rate mortgage, so rising property values do not affect the amount the occupant pays. Increased economic stability from affordable housing enables families to save more and invest in their careers. Besides the economic benefits for residents, the production of affordable housing also creates construction jobs, boosting job market participation.
Despite its benefits, affordable housing is contentious, with debates about its efficacy and cost-effectiveness. Affordable housing can be expensive to produce, and projects often face delays due to environmental concerns. For example, a 20-year plan in Minneapolis to address housing and other public policies was paused in 2022 over concerns about potential pollution from building affordable, multi-unit housing. This highlights the challenge of balancing environmental concerns with the need for sustainable development and addressing the vast numbers of Americans struggling to pay for housing.
Another barrier to affordable housing construction is its high production cost. Housing, regardless of type, is expensive to build. Since the pandemic, operational costs for housing companies have increased, limiting their ability to meet demand. Legislative efforts to promote affordable housing are often hampered by limited government budgets.
The belief that affordable housing lowers property values perpetuates in many conversations surrounding affordable housing. Research has shown this is likely due to stigma about low-income residents and a concern about associated rising crime. Despite these concerns, past studies suggest that when implemented without changing the overall quality or character of a neighborhood, affordable housing has no effect on property values.
The current U.S. housing shortage has demonstrated how interconnected housing is with other policy issues, such as access to energy, clean water, education, jobs, and more. For many of us, the home is the center of our lives, the thing we come back to each day. Without secure, stable housing, much of our lives would be upended. To keep communities connected and provide equal opportunities, it is vital to invest in housing just as we would other aspects of infrastructure.
Written by Nora Priede von Herber, Public Policy Intern
The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.