Cities Need Housing for Families—So Why Not Help Build Them?

This article is part of The Rooftop, a blog and multimedia series from New America’s Future of Land and Housing program. Featuring insights from experts across diverse fields, the series is a home for bold ideas to improve housing in the United States and globally.

For the past several years, a narrative has taken hold in among urban planners and housing advocates: Cities in the U.S. are inhospitable to children and unaffordable to their families. Schools close. Parks go untended. Public spaces are vacant or nonexistent.

Much of this blame is placed on declining birth rates, although there, too, affordability is a major factor. But what about the kids who are already here: growing up, making friends, making even more noise. Where are their cities now?

Families and cities alike face a threat to their respective economic futures: Through restrictive land use, bad urban design, and plain old NIMBYism, cities don’t encourage building homes for families. Grandma and Grandpa aren’t helping, either. Empty-nest Baby Boomers own the largest percentage of family-sized housing in the country, and they aren’t moving out.

While kids might be a net-negative on a city’s budget in terms of schools and social services, they are also investments in the long-term health of that city’s viability. It doesn’t take a math whiz to figure out that fewer kids in a city are eventually going to result in fewer adults: the ones who are supposed to have jobs, pay taxes, and spend money in those cities (ostensibly, on their own kids).

But cities are doing very little about this, at least in a housing context. 

Building and preserving affordable housing requires federal sources, such as Low Income Housing Tax Credits (LIHTC), Community Development Block Grants, or HOME funds. The players in these markets often include a major multifamily tax-credit developer, a local nonprofit organization, and some combination of city and state funding mechanisms. To satisfy federal requirements and lender expectations, emphasis is on unit count and income level. 

And so building housing units and creating housing for families are not the same thing. Under LIHTC, the single-largest creator of affordable units in the country, more than 80 percent of units have two bedrooms or fewer. The program is designed to create rental units with a fixed affordability term, typically for 15 years, which might not provide the stability needed for families renting near the end of an affordability term. Rental-to-homeownership conversion of a LIHTC unit can be difficult, if not nearly impossible, especially as 80 percent of LIHTC projects are larger than 20 units. 

HOME funds can be used for homeownership, but those affordability terms can be even shorter than LIHTC. Given other federal housing dollars are extremely restrictive on homeownership creation, local governments have been reluctant to approach homeownership on their own. Cities certainly have assets: the ability to issue low-interest bonds for housing; vacant or underused land can be redeveloped; or even lists of potential buyers, through public and private partners.

But the barriers that city governments face are not small, either. City governments must also be responsive to the public, who might present real or perceived opposition to government-led housing efforts. Those concerns might involve a sense of fairness: that turning over public land to private individuals will somehow be seen as a giveaway. (Even though this happens all the time in disposition processes and requests for proposals.)

There’s also the unwillingness of government to compete in the traditional real estate market, for example, building mixed-income communities that include market-rate units. These units are subject to none of the scrutiny involved in public funding and can provide more attractive amenities, variety, and incentives. 

As such, cities’ approach to the family housing crisis is typically risk-averse and ineffective. But there are housing models that can fit families’ needs and meet cities’ priorities.

Shared Equity Homeownership

Shared equity homeownership models, like community land trusts and limited equity housing cooperatives, can provide families with the stability needed to raise children in the resource-rich cities that provide greater job and education opportunities. These models allow for a lower purchase price, in exchange for a resale restriction and/or a return of some of the equity gained, so that the housing remains affordable in perpetuity.

Under a shared equity model, the local government could still hold any land it provided, in perpetuity. It could use its funding power to partner with experienced developers to create any number of shared-equity models. These might include deed restricted homes with a maximum resale value; a community land trust that could help steward the properties; or a limited equity cooperative that could build on the land and sell shares for purchase.

None of these models would require the local government to give up control of public land, or provide capital without return. The Atlanta Urban Development Corporation, a nonprofit subsidiary established in partnership with the city and the local housing authority, is pursuing shared equity, single-family homeownership models on public land. Shared equity models work across a variety of housing typologies, including very effectively in family home models like detached single-family homes, townhomes, and rowhomes.

And there’s data to back up their appeal to families: Two-thirds of shared equity households have children. These figures are no doubt influenced by the fact that 87 percent of shared equity residents are first-time homebuyers. For families looking to own a home, shared equity models are not just a good option: They might be the only realistic way to move out of the permanent renter class.

Shared Equity vs. Social Housing

Local government involvement in shared-equity housing shares similarities in the push in some cities for social housing. In a social housing arrangement, government plays a direct role in the development, management, and/or ownership of housing units. Local governments hold properties, issue bonds, and, in theory, keep properties affordable in perpetuity.

But after decades of cuts to government staffing on every level, few local governments are going to have the infrastructure and resources to directly manage property. “Vienna-style” social housing managed by a municipally-owned company would take a large amount of time and resources to build to the same scale.

And even the social housing models in development here in the U.S. are largely designed to produce affordable rental units. In contrast, shared equity models emphasize community ownership, while providing a pipeline to traditional homeownership: Six out of 10 shared-equity homeowners go on to purchase a home in the traditional market.

If cities are serious about ensuring families can live there, they need to acknowledge that their housing markets are both unaffordable and do not provide the type of stable, spacious housing that families need. Community land trusts and other shared equity models solve these issues by helping homeowners stay within their budgets, make decisions together, and provide the stability their kids need to thrive. In other words: by being a family.

Editor’s note: The views expressed in the articles on The Rooftop are those of the authors alone and do not necessarily reflect the opinions or policy positions of New America.