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5 ways to make affordable housing for all in 2023 — from construction laws to mortgage financing

man putting 2023 block next to houseMaking housing affordable for all is not simple, but these ideas are a starting point in 2023.

Andrii Yalanskyi/Getty Images

  • It’s the hardest that it has ever been for the average person to pay for housing costs.
  • Real estate businesses, lenders, and local governments can help alleviate these costs, though. 
  • Insider asked top real estate experts to share their ideas on how to do so in 2023. Here’s what they said.

With the new year is another chance to make housing more affordable for all. 

Right now, it’s harder than ever to buy a home. In 2022, an astronomical rise in mortgage rates coupled with already steep home prices pushed many out of the market altogether. Meanwhile, countless renters saw their monthly payments soar to the point of becoming rent-burdened — a situation where one is putting more than 30% of their household income towards housing expenses. Although rents and home prices started to trend downward in recent weeks, many American households remain cost burdened.

From modernizing zoning policy to make it easier for homebuilders to construct more housing — whether it’s traditional apartments or prefabricated homes — there are things that developers, mortgage lenders, and local governments can do in 2023 to ensure that more people have affordable access to a roof over their heads, according to the following six real estate experts Insider spoke to. 

The solutions are not simple, experts say. There are many hurdles to overcome in conjunction with the political will to make housing more affordable throughout the country in years to come.

Here are five actions that experts say could ease the affordability crisis in 2023.

1. Local governments should address outdated zoning policies and reform them based on today’s needs

local officials in San Ramon, California look over zoning maps in 2003Local officials in San Ramon, California look over zoning maps

San Francisco Chronicle/Hearst Newspapers via Getty Images /Contributor

It all comes down to zoning, George Raitu, senior economist at, told Insider.

In fact, zoning in many places is about 60 years out of date, he said. 

In order to make housing more affordable, Raitu explained, cities need to be zoned to allow housing to be built at a greater density further away from the city’s downtown. 

Houston has been able to keep its housing affordable in large part because of just this, he said. More housing is built as a result and the supply keeps prices down. Still, there are other problems with that kind of building: a Princeton University study found that this sprawling development father away from the downtown area increased flooding during Hurricane Harvey in 2017. When planning new zoning laws, cities should be asking how do we increase total housing units while minimizing the negative impact on the city. 

“It sounds old fashioned, but movement in the right direction would be a truly innovative task,” Raitu said.  

Raitu is not alone in his thinking. Jeff Tucker, the chief economist at Zillow, also told Insider that the biggest hurdle to affordable housing was “zoning reform.”

It’s a mission that is taking off in California. This year, several new housing laws were introduced to the state’s legislature as a means to alleviate its housing crisis.

The two most significant housing bills, titled SB 6 and AB 2011, were signed into law in September and permit home construction on what had previously been classified as non-residential lots. This means that homes can be built in places that were previously reserved for commercial uses like retail and offices.

Critics of the bills are concerned that the law may lead to lower levels of commercial property tax income for local governments, however, supporters hope rezoning will eventually bolster the state’s affordable housing supply.

2.  Local governments can forge private-public partnerships to combat prohibitively high costs to build

new home construction

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Before even putting a shovel in the ground, the current cost of building a home is about $100,000 in material and labor, according to a Fannie Mae report. These high costs trickle down to the consumer, ATTOM’s Rick Sharga said, because it’s impossible to make a profit without pricing a new home out of reach for typical households in the US. 

For this reason, local governments need to step in, and offer deals that incentivize development, he explained. This would be a situation “where the government actually helps me to offset costs and contributes to a certain extent,” Sharga added. 

In Philadelphia and Chicago, local governments have been operating programs that sell long-vacant publicly-owned land to individual homeowners and private developers for as little as $1 to help spur new construction and to get the parcels back on tax rolls. 

But local governments can also offer tax breaks or actively contribute to the cost of building in exchange for a chunk of equity in the project. California has already done this when its citizens voted to pass Proposition 46, which provides funding specifically for affordable housing. It allocated just shy of $1 billion to the multifamily sector, according to CCIM, and is expected to see $13 billion in private funds be pushed into affordable housing. The aim is to add up to 134,000 places to live by 2027. 

3. Cities should incentivize building for the workforce, not just the billionaires

mother greets daughter after coming home from workLocal government leaders should prioritize building housing for the typical family, rather than the ultra-wealthy, Jonathan Miller said.

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Local lawmakers also need to craft policies that incentivizes equitable distribution of luxury, market rate, and workforce housing in cities like New York, according to housing expert and appraiser Jonathan Miller. 

New York City, home to some of the most unaffordable zip codes in the US, is a perfect case study of what happens when this is not in place.

There are too many ultra luxury units geared towards billionaires but not nearly enough housing for the typical worker in the city of nearly 8.5 million people, Miller said. Because of this, many of those that live and work in the city simply can’t find an affordable place to live because there is a dearth of homes created for this price range. 

But, Miller admits, it’s a “Catch-22.”

“The thing that you have to couch all that with is that the city doesn’t have the money to subsidize,” he said. So instead, the city needs to zone to incentivize building in certain areas, so that real estate can continue to be profitable while striving to be affordable. 

4. Mortgage companies can make it easier to get financing on manufactured and prefabricated homes. 

tiny home on a lot of landEliminating some barriers to accessing financing for prefabricated homes could alleviate the crisis.

Louise Beaumont/Getty Images

Tiny and prefabricated homes have been having a moment in the last few years. These minimalist, typically under 500-square-foot dwellings, can cost as little as $10,000 to buy — a far cry from the typical home prices that hit over $400,000 this year. 

There are numerous draws to these types of homes with their small footprint, largely due to their affordability and flexibility they offer. 

But unfortunately, because securing a mortgage on these properties is difficult, they are still out of reach for many — lenders require higher credit scores than a mortgage on a conventional home would, and they are more likely to lend money to companies that then lease out the homes, instead of directly to the person living it the home, according to a study the Pew Research Center released this month. 

Indeed, nearly 54% of those surveyed said they were flat out denied a mortgage for a manufactured home, the study found. Experts say that breaking down those barriers could be one way to quell the affordability crisis. 

“These aren’t your grandfather’s mobile homes. In a lot of cases they’re really nice properties,” Sharga said. “The mortgage industry really needs to take a look at how to make that kind of financing more widely available.” 

In July, Ginnie Mae, a federally-backed mortgage provider, specifically focused on affordable housing, requested that a manufactured home mortgage program be extended. 

5. Local governments can encourage homeowners to refurbish deteriorating or abandoned homes

apartment being refurbishedEncouraging homeowners to refurbish their homes could take some strain off the market.

James Osmond/Getty Images

Denise Scott, president of Local Initiatives Support Corporation, a national nonprofit organization, told Insider that persevering the nation’s existing housing stock is an important step in boosting its supply of affordable homes.

“We are looking at preservation as a part of an innovative strategy given market conditions and the fact is that it’s hard to build more homes,” Scott said. Indeed, higher mortgage rates and supply strain constraints have deterred home builders from constructing many homes in 2022 — this has only exacerbated the nation’s affordable housing crisis.

With home construction slowing and home prices still rising — albeit at a slower pace of growth — Scott suggests that local governments introduce more home repair programs to help citizens “recapitalize their homes.”

“LISC is particularly interested in this strategy as it connects to BIPOC homeowners,” Scott said. “The idea here is to use a blend of government and private dollars to provide very low or zero-interest loans to help these families recapitalize their homes and bring them up to standard.”

This method could lead to more families owning the title of their homes, making it easier for them to eventually pass on the property to a family or community member. This could eliminate participation from developers or brokers who could purchase the property and later sell it or re-market it as costly rental units.

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