Why it just isn't possible to build affordable housing in the current U.S. housing market

2016-07-26T13:03:00-04:00

Nudge down the design and development fees, pay the construction workers less, drop the interest rate as low as it will go, spend nothing on maintenance, even assume that someone gave the land for free — and the buildings still aren't feasible. A 50-unit apartment is still millions short. "Even if you try to tweak a lot," Poethig says, "for people of extremely low incomes, there’s just going to be this gap to the cost of development and production of housing."

A very enlightening (and depressing, but with tentative solutions!) interactive from the Urban Institute uses data from Denver, Colorado's housing market to show how building affordable housing just doesn't "pencil out"—meaning, as Emily Badger puts it for the Washington Post, "The costs of building them outstrip what the people who may live in them could afford to pay in rent."

As Badger explains it, this is mostly due to an imbalance between public and private involvement in the affordable housing system. It isn't profitable for developers to make affordable units, because the tenants just can't pay enough, but public subsidies often can't bridge the gap either. She sums it up:

To the extent that government should step in when the private market can't, affordable housing is a prime example. The larger problem, though, is that we hardly devote the kind of public resources to this market failure that it demands.

Denver was chosen because "It doesn't have a white-hot housing market like...

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Why it just isn't possible to build affordable housing in the current U.S. housing market