Area of Research

Housing Policy

Housing is a basic human need. The cost of housing—owning or renting—is often the single largest expenditure of the average household. Housing is deemed affordable if the share of household income expended on it is reasonable. If a household spends a disproportionate share of income on housing, however, it is likely that there will not be enough money left for healthcare, childcare, and transportation, all essential to a decent quality of life.

Homeowners that spend too much on housing are at higher risk of defaulting on mortgage payments, and less likely to save for college tuition or retirement aor to have medical insurance. At time, such households cannot afford proper upkeep of the property, affecting its value. The savings potential of renter households that pay too much for housing is also limited.

This can prevent renters from saving for a down payment for a house, delaying homeownership—a significant goal for most Americans and the thrust of many federal, state and local policies. When faced with rent increases, households may be forced to relocate, with limited options. Urban areas that lack affordable housing may not be attractive to workers or employers. A shortage of affordable housing can have an inflationary effect on wage rates and be a damper to economic growth. Thus, housing affordability is not only a measure of quality of life, but also an indicator of the social and economic prospects of cities and regions.