Crisis of Housing Choice, Attainability, and Mobility

When we talk about the housing crisis in this country, it is often difficult to pinpoint exactly what we mean. Is it a shortage of single-family homes in the suburbs? Workforce housing on Main Street? Is it a problem of affordability, attainability, choice, or all of the above? Figuring out what kind of housing to build and where to build it requires us to precisely define the problem, without which we’re at risk of wasting time, money, and political momentum.

This post defines where we are today and is part of a series on recent presentations KUA gave in Bristol, VA in collaboration with the IncDev Alliance and IncCodes. You can follow along with the presentation here. We also obtained data from AARP’s Making Room and The Great Senior Short-Sale of Why Policy Inertia Will Short Change Millions of America’s Seniors by Arthur C Nelson. Both are excellent sources for more context on our discussion here.

The Housing Mismatch

The housing crisis is precipitated by a drastic change in the housing needs of the country and by a failure of zoning to allow for the right housing in the right places. To understand exactly what kind of housing we need, consider that the majority of American households are no longer nuclear families. We now have more one- and two-person households of singles, childless couples, and seniors than we do the standard couple with two kids—a trend that is only going to accelerate over time as the population ages and has fewer kids. The change in demographics matters because we have different housing needs during our lifespan.

A 26-year-old single guy is not going to live in a McMansion in the suburbs, just as a 70-year-old retiree would likely not choose a large single-family house with a large front lawn to maintain. Changing finances, lifestyle needs, and health throughout our lifespans dictate what kind of housing is both attainable and desirable.

As the wealthiest and largest homeowning generation (baby boomers) continues to age out of their peak houses, the vast majority of houses that we need will need to be downsized. The crux of the problem is that most new construction today is large-lot, single-family homes, while smaller homes (<1400 SF) keep dwindling in supply. The main reason for this is policy: zoning dictates what we build, and the only houses that are legal to build in most places in America are large and single-family. The small starter house that was legal, and normal, in the 1950s is simply not allowed by today’s zoning codes. As a result, the supply of housing does not match the diverse and growing needs of our population—the demand for multifamily and “missing middle” homes is not even close to being met.

There is another side of demand that is not being met with today’s supply: housing in walkable neighborhoods. Most people, regardless of age, want to live in a walkable place. Less yard work, the ability to walk to dinner or a show, and decreased dependence on a car to go everywhere are a few of the benefits of doing so, as is living in a vibrant and thriving place. These are even higher priorities for empty nesters, who have the wealth to pay for it, than young professionals. In reality, very few people actually live in walkable places. The lack of availability and affordability of housing pushes us out to the suburbs with large-lots, large houses, car-centric planning, and a lack of diversity of socioeconomic status, age, and profession. America’s laws make it illegal to both make a new walkable neighborhood and to build more housing in existing ones. We have, as a result, a shortage of housing in walkable and potential walkable places. A growing demand for the limited supply of missing middle houses in these neighborhoods leads to rising costs to the point of untenability.

A Crisis of Affordability

A third of American households are estimated to be cost-burdened (pre-pandemic). It isn’t exactly new today to note that home prices and rents have skyrocketed, while incomes haven’t come close to keeping up. What is surprising, however, is just how easy it is to be cost-burdened. Defined as spending more than 30% of income on housing and more than 50% on housing and transportation combined, being cost-burdened is the default for millions of people who live in American cities with their mismatched housing and lack of walkability.

Let’s take Bristol, VA as an example for how this works. About a fourth of the city’s households were cost-burdened in 2024. A key to understanding what kind of housing is accessible to whom is area median income (AMI), which is calculated by the Department of Housing and Urban Development to determine regional thresholds for housing. Here is the math for being cost-burdened by transportation alone (defined as spending >20% of income on transportation):

• 100% AMI for Bristol is $49k

• AAA estimates the cost of vehicle ownership to be $890-$1250/month

• You must make at least $53.4k/year to not be cost-burdened by vehicle ownership for one car

• Double these numbers for two car households

More than half of Bristol’s households are cost-burdened for just owning one car! Being cost-burdened by housing makes this is a compound challenge, and the odds that you have housing that is affordable enough to offset these costs are nearly zero. Rents and home prices have far outpaced growth in wages for the last 25 years, causing a third of American households to be cost-burdened by housing (defined as spending >30% of income on rent and utilities). The picture is worse when you consider the typical two-car household.

Economic exclusion from the most walkable neighborhoods exacerbates these issues. When everyone is chasing the same stock of housing in the same neighborhoods, those who cannot afford what is available get pushed out to the suburbs. These households are more easily cost-burdened: they either spend significantly more of their income on housing in walkable neighborhoods or spend a larger chunk on transportation if they’re pushed out of these areas. Either way, there is no direct remedy. And exclusion by class is a very effective way to exclude by race, considering that the net worth of white families is five to six times that of black and Hispanic families. The housing crisis is largely a wealth crisis: inaccessibility to capital, barriers to credit, and an inability to get a mortgage all prevent the attainability of housing.

The Goal

We can see how dissecting the housing crisis leads us to a very specific problem that needs solving: how do we provide more attainable, more walkable, less car-dependent housing choices? Meeting the demand for missing middle housing in walkable neighborhoods not only addresses the changing demographics of the American household, but alleviates the cost-burdening that millions are facing today. The key is that we need to do all of this without big housing subsidies for it to be sustainable. Given that, what kinds of projects can be car-lite, where can they be located, and how do you find these places? The next post from the Bristol presentations will turn to these questions to provide a strategy to mitigate the housing crisis that America is facing.