Housing affordability is a critical issue in Idaho and across the country. With higher interest rates set by the Fed, higher mortgage rates follow, making it that much harder for Idahoans to buy homes.
According to the Harvard University annual report Housing State of the Nation report, sponsored by Habitat for Humanity, in 2020, more than 1 in 7 households paid more than half of their income for housing, while paying more than 30% of monthly household income for rent or mortgages is defined as “unaffordable”.
- Additionally, “Although housing construction jumped in 2021 and 2022, the backlog remains large enough that it could take a decade of record homebuilding to significantly increase affordability, even taking into account mitigating factors like rising interest rates.
- In Idahothe researchers estimated that the income needed to buy a median-priced home in Boise is $141,700, while the median price of a home in Boise is $515,319.
- Idaho Falls isn’t far behind that estimate with a needed income of $111,508 and a median home price of $405,520.
To provide more affordable housing, existing tools in the tax toolkit encourage builders to create more affordable housing. The Low Income Housing Tax Credit (LIHTC), for example, is responsible for creating the majority of all affordable rental housing created in the United States today. In Idaho, there are currently 248 LIHTC projects across the state supplying over 12,000 units. These projects vary in size and are split roughly between urban and rural areas, with approximately 72% targeted at families and 28% at seniors and seniors. One such project is the Valor Pointe Apartments in Boise, which targets chronically homeless veterans.
While the LIHTC and other credits are part of the solution to affordable housing development, we need to address other factors that drive up housing costs in general. In today’s economy, the need to reduce inflation is paramount. Unfortunately, it has been allowed to run rampant, and the necessary actions of the Federal Reserve will increase the cost of housing. Builders are also feeling the effect of inflation through more expensive building materials. And skyrocketing fuel prices continue to put even greater pressure on builders’ budgets, making it even more expensive to get materials to construction sites. In addition, several economic factors have resulted in a shortage of affordable housing.
One way to alleviate the shortage would be to look into more manufactured homes. While at the U.S. Department of Housing and Urban Development, former Secretary Ben Carson established the Office of Innovation to evaluate new ways of delivering housing and in doing so, emphasized improving efficiency and the suitability of prefabricated houses. Zoning laws and regulatory barriers, which are often uncoordinated, unnecessary, or overly burdensome, also present challenges for affordable housing by creating excessive costs that inhibit affordable housing development.
We must strive to reduce regulatory barriers, which requires innovative approaches, as well as teamwork from local, state and federal governments, and the private sector. This includes initiatives such as Opportunity Zones that were part of the Tax Cuts and Jobs Act. Data released as of March 24, 2022 by the Opportunity Zone Fund Directory shows that $49.18 billion has been committed to planned investments and 60% of these funds target investments in affordable housing and community development.
Houses are more than just physical structures. Homes are a foundation for wealth creation, family stability and community cohesion. It’s critical that we make the American dream of homeownership as accessible to as many Idahoans as possible, which will continue to drive the nation’s economic success. I will continue to work to ensure affordability and accessibility of home ownership for Idahoans.
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