We can’t simply do more of the same if we hope to wrestle down the housing affordability crisis. Fortunately, over the last 25 years we’ve learned some valuable lessons, and they point to how we can take our impact to a new level.

This blog post is part of the series “Closing the Racial Gaps: Together We Can,” which highlights efforts across the United States that show promise for closing racial opportunity gaps and creating a more equitable future.

More than ever before, we understand just how much place matters. Where we live determines our access to opportunity in life – to rewarding jobs, quality education, nutritious food, effective health services, convenient public transportation and other resources necessary to thrive.

At the center of this ecosystem – at the center of our place – is our home.

My organization, Enterprise Community Partners, was founded on the belief that a home is the “first rung” on the ladder of opportunity. For low-income families, not only does housing have by far the biggest impact on their pocketbooks, often crowding out other critical expenditures like groceries or gas to get to work, but it provides the essential platform for growth. Your family’s health, your connection to quality employment, your child’s ability to study – these things are extraordinarily difficult without a stable home.

The story of affordable housing in the U.S. over the last 25 years is one of tremendous progress. Our field has provided millions of affordable homes that, for an untold number of low-income people, have meant a springboard out of poverty. We should be proud of that.

Yet despite this progress, the affordable housing challenge continues to grow. At this moment, 11 million renter households – whose incomes are typically half those of homeowners – are housing insecure, either homeless or paying more than half their income each month on rent (meaning they are often just a paycheck away from homelessness). This constitutes a full-blown crisis.

Growing affordable housing challenge

11 million renter households are housing insecure, either homeless or paying more than 50% of their income on housing

And it is not merely an issue of scale. We can’t ignore the disproportionate effect of this crisis. Look at virtually any major city in America and you’ll find persistent patterns of residential segregation, where poverty continues to be heavily concentrated along racial lines – this despite a half-century having passed since the seminal Fair Housing Act deemed housing discrimination illegal.

We can’t simply do more of the same if we hope to wrestle down the housing affordability crisis. Fortunately, over the last 25 years we’ve learned some valuable lessons, and they point to how we can take our impact to a new level. Here are three significant lessons that I believe should carry us into the future:

  • We must continue to activate the markets. We have already seen how innovative financial tools, such as targeted tax credits, can be a force for positive impact. We should build on this success.

  • To reverse pernicious patterns of segregation, we need a balanced (“both/and”) approach to community development: both providing ways for low-income people to move into opportunity-rich neighborhoods and investing in distressed neighborhoods.

  • We need truly cross-sector solutions. The sectors that provide opportunity – including health, education, housing and transportation – need to align objectives and approaches. Our challenges are integrated, so our solutions must be, too.

Activating the Markets for Social Good

For the last three decades, affordable rental homes for low-income families have been created almost exclusively through a unique and powerful financial tool: the Low Income Housing Tax Credit (LIHTC). LIHTC, which was created in part by Enterprise founder Jim Rouse, is an undeniable success story in public-private partnerships, having financed virtually all of the country’s affordable housing construction since the late-1980s — nearly 2.8 million affordable homes and counting.

LIHTC is valuable not only for its successes, but as a guide for the future. In short, LIHTC is a federal policy program that incentivizes private investors to invest in affordable housing – something they otherwise would not do because of the unfavorable economics. In exchange for their investment, investors receive federal tax credits – a dollar-for-dollar reduction in their tax liability – redeemable only when construction is completed and the low-income family moves into their new home. Furthermore, the rent must stay affordable for a 15-year window, throughout which the government can recapture the tax credit in the event of noncompliance. This pay-for-performance model infuses market discipline, unlocks dramatically more capital, and ensures that the federal government only pays when the desired outcome is achieved.

Encouragingly, other similar social investment tools have emerged over the last few years, such as the New Markets Tax Credit and social impact bonds (SIBs). They too demonstrate the power of activating the markets for social good, pointing to how we can unlock dramatically more capital for communities that need it.

A Balanced Approach to Community Development

The debate about how to fight poverty in America is often presented as a choice.

Should we focus on revitalizing distressed communities, or should we work to help low-income families move into higher-income neighborhoods with more immediate to opportunities like good schools and jobs?

The answer? Both.

The “choice” has always been a false one. This debate was reignited last year amid two landmark events. The first: a Supreme Court ruling on disparate impact, which affirmed that housing policies that segregate minority groups – even unintentionally – can be ruled illegal. The second: the Obama administration’s Affirmatively Furthering Fair Housing rule, requiring state and local governments to actively combat segregation.

These events breathe new life into our ability to reverse residential segregation in America, almost fifty years after the passing of the Fair Housing Act. But we need a balanced – “both/and” – approach.

The good news is we already have tools to do it, such as housing vouchers that provide low-income individuals a degree of mobility and tools like LIHTC and the New Markets Tax Credit, which draw investment into historically underinvested communities. Now we just need the collective will to strengthen and expand these tools.

Integrated, Cross-Sector Solutions

The last 25 years have continually reinforced that the challenges facing our communities are deeply, intricately interwoven. Poor quality housing leads to poor health; limited transit means poor access to jobs; housing instability leads to poor school performance. No problem is entirely isolated. We need integrated solutions, with all sectors at the table.

For Enterprise’s part, while housing continues to be at the core of our work, we now use a more comprehensive “opportunity” lens in our work. This is guided by our emerging “Opportunity Index” – a tool that maps how opportunity-rich a given community is (i.e., the availability of affordable housing, quality education, employment, etc.), enabling us to develop more targeted solutions with partners where there are clearly identified needs.

At the heart of the index is technology and data: a way of aggregating open-sourced, trending, resident-fed information that reveals the specific needs of a given community. More than anything, though, we see the index as a platform for networked collaboration, empowering us all to align our objectives for exponentially greater impact.

In another 25 years, when we look around and see thriving, integrated neighborhoods across the United States, I believe it will be because we all brought everything (and everyone) to the table: innovative financial tools to unlock capital in underserved communities; an inclusive, “both/and” approach to reversing the cycle of concentrated poverty; and a platform for cross-sector collaboration. Opportunity is not dependent on any one resource – not housing alone, nor education or health – but on all of these essential components for a fulfilling life working together.

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