Housing Affordability: A Systems Perspective

Where We Are.

As of 2024, the United States faces a significant shortage of affordable housing, with an estimated deficit of 2.8 million units. [Source]

Nearly half (45%) of Canadians reported being very concerned about housing affordability because of the rising costs of housing or rent, according to the most recent cycle of the Canadian Social Survey (CSS). [Source]

Even though home price appreciation has slowed, with a 2.34% increase reported in November 2024, affordability remains a concern. [Source]

Systems.

In addressing complex challenges, it is essential to take a systems-based approach—recognizing that outcomes are shaped by a network of interconnected factors.

Housing affordability is no exception. It is influenced by a dynamic ecosystem that encompasses policy frameworks, economic forces, regulatory environments, and market behaviors.

To ensure both affordability and economic resilience, policymakers must shift from passive market reliance to proactive structural design. [Source]

Several systemic factors contribute to the current housing affordability challenge:

• Zoning and Land-Use Regulations: Restrictive zoning laws often limit the development of higher-density housing, constraining supply and driving up costs. [Source]
• Financialization of Housing: The increasing involvement of institutional investors in the housing market has led to higher rental rates and reduced affordability. [Source]

To address these challenges, several levers within the system can be utilized:

• Policy Reforms: Reevaluating and amending zoning laws to allow for higher-density and mixed-use developments can increase housing supply. [Source]
• Incentivizing Affordable Housing Development: Expanding the allocation of Low-Income Housing Tax Credits (LIHTC) or streamlining the application process can help address the shortage of available credits, incentivizing developers to build more affordable housing units. [Source]
• Public-Private Partnerships: Enhancing collaborations between government entities and private developers can facilitate innovative housing solutions. [Source]

Innovative Ideas.

Innovative approaches are emerging to tackle housing affordability. Here’s what we can learn from global best practices and pioneering initiatives to drive sustainable and scalable solutions.

• Office-to-Residential Conversions: Entering 2021, there were 12,100 office-to-apartment units in the U.S. conversion pipeline. Fast-forward to 2025, and that figure is now 70,700—an increase of 484% in just four years. This trend underscores the potential to repurpose underutilized office space to help address housing shortages. However, successful conversions require overcoming structural, regulatory, and design challenges. Cities like New York and Washington, D.C., offer key insights into navigating these complexities and scaling conversions effectively. [Source]
• Community First! Village (Austin, Texas) is a 51-acre master-planned community providing permanent, affordable housing for individuals transitioning out of chronic homelessness. The Village features micro-homes, RVs, and cottages, with shared facilities such as laundry, restrooms, outdoor kitchens, a health clinic, and green spaces. Residents pay $225 to $500 in rent per month, with opportunities to earn income through gardening, woodworking, and other micro-enterprises. [Source]
• Innovative Construction Methods:
  
  • Low-Cost Materials: Utilizing materials like glass fiber reinforced gypsum (GFRG) can reduce construction costs by 20-30%. The Indian government is constructing thousands of homes using GFRG to address its housing shortage. [Source]
  • 3D-Printed Homes: This technology accelerates construction and reduces costs. In Texas, a community of 100 3D-printed homes is under development, offering properties at prices lower than traditional homes. [Source]

Execution Is Everything.

Effective housing solutions hinge on smart execution—aligning policies, finance, community support, and infrastructure.

1. Policy & Regulatory Adaptability

• Zoning Reforms: Cities like Washington, D.C., are leading efforts to enable higher-density, mixed-use developments and fast-track approvals, demonstrating how targeted zoning changes can unlock housing potential. (Read more about Washington D.C.’s rezoning efforts).
• Code Adjustments: Updating building codes is critical for office-to-housing conversions, as older office structures often fail to meet residential standards (e.g., ventilation, window access). Cities that modernize codes see greater project viability. [Source]
• Expedited Permitting: Austin’s fast-track permitting lanes illustrate how streamlining approvals can accelerate affordable housing delivery, reducing delays that often stall critical projects. (Read more about Austin’s fast-track permitting lanes).

2. Financial Models That Work

• Public-Private Partnerships: Toronto’s affordable housing initiatives highlight how cities can unlock development by leveraging public land and private investment, creating scalable models for affordability. (Read more about Toronto’s affordable housing initiatives).
• Layered Financing: Combining tax credits, subsidies, and impact investing has proven effective in supporting long-term affordability, ensuring projects remain financially sustainable.[Source]
• Affordability Protections: Non-profit organizations acquire land to remove it from the speculative market, ensuring permanent affordability. For instance, Dudley Neighbors Incorporated in Boston manages over 30 acres of community-controlled land, including 228 permanently affordable housing units. [Source]

3. Community Buy-In & Equity

• Transparent Engagement: A study by the Australian Housing and Urban Research Institute found that early and transparent engagement with communities can significantly reduce opposition to affordable housing developments. [Source]
• Mixed-Income Housing: Cities like Vienna have extensive social housing initiatives, with nearly 60% of residents living in well-maintained, rent-stabilized units. These programs are funded through a combination of public investment and resident contributions. [Source]

Questions.

At Opus Group, we believe transformative solutions start with asking better questions. Here are a few we're asking regarding the housing affordability crisis:

1. If we focused solely on the available assets and levers in the system, what solutions would emerge?
2. What successful models from other cities or countries can be adapted to our local context?‍
3. If there were no rules and we were starting with a blank canvas, what would we build?