As affordability vanishes coast-to-coast, cities are tearing up their rulebooks in a race to permit, finance, and build. Some are succeeding. Most aren’t.

“In the long run, we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.”

- John Maynard Kaynes

The Rent Math Doesn’t Work Anymore for the Average American

Across the United States, the housing equation is failing. A median-income renter in cities as diverse as Phoenix or New York now spends nearly half their income on rent. According to 2024 Census data, nearly half of all renters nationwide are cost-burdened (spending more than 30% on their housing), and more than 7 million extremely low-income households can’t find affordable homes at all.

What was once considered a coastal affordability issue has now engulfed Sun Belt cities, small mountain metros, and Midwestern boomtowns. Bozeman, Montana, once a quiet outpost for second-home buyers, now ranks among the top 20 most cost-burdened small metros in America. In Miami, even workers earning $60,000 struggle to afford a one-bedroom apartment. Across the country, essential workers (teachers, EMTs, hospital staff) are priced out of the neighborhoods they serve, pushed to the fringes of the cities that rely on them.

 Between 2015 and 2023, the U.S. added nearly 18 million people but built only about 11 million new housing units. Meanwhile, from 2020 to 2023, rents rose over 20% nationally, and by more than 30% in cities like Tampa, Boise, and Austin. Wage growth, particularly for the bottom half of earners, has not kept pace.

The COVID-19 pandemic’s consequences (supply chain disruptions, labor shortages, and construction cost inflation) all compounded the problem. Multifamily construction costs rose by over 35% in some metros. Permitting timelines lengthened under the weight of backlogs and procedural reviews. In 2024, the Department of Housing and Urban Development (HUD) reported that homelessness rose to over 653,000 people, the highest level recorded since the agency began publishing annual statistics in 2007.

America now has fewer homes per capita than it did in 2000. The fallout goes beyond the poor. For middle-class families, housing has shifted from a ladder of opportunity to a source of financial strain.

The housing system has failed, driven by policy drift, political caution, and procedural gridlocks that block building where demand is highest.

Why Can’t We Build? The Supply Mechanics of the Affordability Crisis

America’s housing pipeline is jammed at nearly every stage. Even where demand is strongest, projects face a slew of constraints that stack risk, inflate costs, and slow delivery.

The first and most persistent obstacle is zoning. Roughly 75% of residential land in U.S. cities is zoned exclusively for single-family homes. Duplexes, triplexes, townhomes, and apartments are often outright banned, even in growing regions with housing shortages. These rules were originally designed to separate uses and preserve neighborhood character, but over time they limited flexibility and reinforced low-density development. In cities like Los Angeles, more than 70% of residential parcels remain zoned for single-family only; similar maps persist in Charlotte, Atlanta, and Seattle. While reforms are gaining momentum, they’re often incremental, facing political resistance from homeowners protective of property values and wary of density.

Loosening zoning alone doesn’t unlock housing. Even where multifamily is legal, local permitting regimes often create years-long delays. In San Francisco, a 2023 state audit found that housing approvals took an average of 15 months, 10 months longer than any other major California city, and frequently failed to comply with state streamlining laws. Projects required multiple hearings, overlapping reviews, and were subject to appeals at nearly every step. 

While the city has pledged to speed up, the deeper issue remains: the process is unpredictable. For developers, unpredictability kills deals. If no one can say when a project will break ground or generate rent, it becomes far harder to secure financing, price risk, or justify investment at all.

Even when projects get approved, financing often unravels. High interest rates have pushed borrowing costs to 15-year highs, eroding the feasibility of many market-rate deals. Affordable housing developers, who depend on layered capital stacks of tax credits, grants, and soft loans, face fierce competition for limited funding. In San Diego, over 9,000 approved units remain stalled as developers struggle to close financing gaps. Labor costs compound the challenge, now accounting for 40–50% of total construction budgets in multifamily projects nationwide. 

Even with capital and approvals in place, legal and political veto points can still derail momentum. Neighborhood associations can delay or block projects through appeals, courts can halt construction with procedural or environmental challenges, and elected officials often face backlash for approving density. These veto points layer uncertainty onto an already fragile process.

What makes this harder is the fragmented nature of American governance. Housing policy is spread across three levels of government: cities control zoning and permitting, states manage financing and tax credit allocation, and the federal government supplies subsidies and regulatory frameworks. However, there is no central coordination. Each level acts independently.

Housing production in the U.S. is trapped in a maze of disconnected rules, agencies, and incentives. That fragmentation makes it harder to scale, slower to execute, and easier to block. Projects shrink, stall, or disappear entirely. 

What Cities Are Trying; What Policies are Working?

Across the country, cities are rewriting housing rules in search of affordability. Some are slashing red tape, rewriting zoning, and testing new financial models or tenant protections. These case studies highlight what that experimentation looks like in practice. 

Los Angeles has long been synonymous with housing gridlock. 

In 2023, Mayor Karen Bass issued Executive Directive 1 (ED1), declaring a housing emergency and allowing qualifying 100% affordable housing projects to bypass council hearings and receive approval within 60 days. The city council codified this into law in late 2025 through a new Affordable Housing Streamlining Ordinance. By mid-2025, the policy had fast-tracked over 490 projects, totaling more than 40,000 units. Average approval time dropped to just 22 days, down from 9 months. 

However, the buildout has lagged: only 2,500 units had broken ground by mid-year. 

Developers cite difficulties assembling financing, navigating overlapping funding sources, and a scarcity of qualified labor. Moreover, the city exempted large swaths of single-family residential land – about 72% of Los Angeles’s parcels – from eligibility, limiting the geographic reach of the reform. Still, ED1 proved a major proof of concept; process reform can slash entitlement delays. But faster approvals aren’t enough. They need to be matched with land, capital, and construction capacity.

San Francisco was notorious for housing delays due to bottlenecks in their permitting process. 

San Francisco launched its Housing for All initiative in 2023. After a state audit found its approval timelines exceeded all other California cities, Mayor London Breed led passage of the Housing Constraints Removal Act. The law eliminated many discretionary reviews and expanded by-right approvals for compliant projects.

The city layered in financial tools: a $300 million affordable housing bond (passed in 2024), reductions in inclusionary zoning requirements, and new office-to-residential conversion incentives. By 2025, the city revived a previously stalled 2,600-unit development with new financing and state-aligned processes.

Yet costs remain formidable: per-unit construction costs in San Francisco often exceed $700,000; the national average is $300,000 to $400,000 for multifamily development. 

State pressure has pushed the city to commit to rezoning if it falls short of housing targets. But even with that mandate, challenges persist. A 2024 report by SPUR found that fewer than 20% of approved affordable housing projects had secured full financing, and nearly half of the city’s pipeline units were stalled due to escalating costs or incomplete funding stacks. San Francisco’s own planning department has acknowledged that without additional subsidies or cost reductions, most of the planned new units will not be viable.

Streamlining helps, but without funding and feasible costs, projects won’t get built.

Minneapolis became a national model in 2018 when it eliminated single-family-only zoning, allowing duplexes and triplexes citywide. 

It followed with further upzoning along transit corridors and design streamlining. Multifamily permits quadrupled by 2022, and rent growth slowed to under 1% annually between 2022 and 2024. Still, much of the permitted housing has yet to be built, as developers face financing hurdles and rising construction costs—highlighting that entitlement alone doesn’t guarantee delivery

Across the Mississippi River, St. Paul took a different tactic. In 2021, voters approved one of the nation’s strictest rent caps – limiting annual rent hikes to 3% with no exemptions. Developers and lenders pulled back. New housing permits fell 80% the following year. Major projects like the Highland Bridge development stalled. In response, the city amended the policy in 2022 to exempt new construction for 20 years.

Tenant protections can guard against rent shocks, but if poorly structured, they may stall construction and shrink supply.

New York City’s housing story is one of long-standing tenant protections colliding with escalating scarcity. 

Over 2.4 million residents live in rent-stabilized units. In 2019, state lawmakers overhauled rent laws to prevent deregulation and curtail rent increases tied to renovations. While this preserved stability for many, it created new tensions. By 2023, landlords had pulled over 60,000 stabilized units from the market, citing an inability to finance repairs at capped rents.

In 2024, the state passed a Good Cause eviction law, expanding protections to previously unregulated tenants. Meanwhile, Assemblymen Zohran Mamdani launched a 2025 mayoral campaign centered on a four-year rent freeze and large-scale social housing expansion. The city is also exploring adaptive reuse, turning distressed hotels and office buildings into affordable units – a process that gained urgency as remote work emptied parts of Midtown.

New York exemplifies the tradeoffs embedded in strong protections: while essential for tenant stability, they require complementary investment and maintenance incentives to keep housing stock viable.

Other cities are testing their own formulas:

• Austin has paired zoning reform with Affordability Unlocked bonuses, enabling thousands of new units since 2019. Court battles and infrastructure gaps have slowed deeper reform.
• Denver introduced inclusionary zoning in 2022 and invested in a dedicated affordable housing fund, helping launch over 50,000 units currently in the pipeline.

Cities that align land use, permitting, and subsidy are seeing traction. Those that pull just one lever, or pull in opposite directions, risk stalling out.

The Federal Layer: The federal government sets the tone through funding, legal frameworks, and political signals. Federal housing policy has become a tale of two visions: deregulation and incentives.

Under President Trump, the emphasis was on deregulation and market flexibility. His administration rescinded the Obama-era Affirmatively Furthering Fair Housing rule, arguing it imposed federal planning mandates on local communities. Instead, HUD promoted Opportunity Zones. Designed to funnel capital into economically distressed areas through tax breaks, the program lacked affordability requirements, and multiple studies found that much of the investment flowed into already-gentrifying neighborhoods. By 2022, less than 4% of Opportunity Zone capital had supported housing production, and even less was linked to income-restricted units.

President Biden reversed course, reintroducing fair housing enforcement and launching the “Pro Housing” grant program, which awards funding to cities that reform exclusionary zoning. As of mid-2025, more than 20 jurisdictions, including Austin, Minneapolis, and Rochester, had received these grants. HUD also issued new guidance supporting tenant organizing and transparency in rent increases.

Biden’s administration proposed a massive expansion of Housing Choice Vouchers and billions in affordable housing tax credits as part of the Build Back Better agenda, but most of those provisions were stripped during congressional negotiations. Meanwhile, the White House convened a Housing Supply Action Plan in 2022 aimed at unlocking new development by streamlining federal financing and incentivizing zoning reform.

Despite the contrast in approach, both administrations have run into the same structural challenge: the federal government doesn’t zone land, approve permits, or build units. Instead, it can only shape the incentives that steer those decisions.

Still, momentum is building for a stronger federal role. Some proposals under debate include:

• Linking federal infrastructure dollars to local housing targets.
• Creating a national land-use data platform to track bottlenecks.
• Expanding tax credits tied to affordability duration and income targeting.

Washington sets the rules of the development world. A more muscular federal role, rooted in outcomes and flexibility, could tip the balance toward jurisdictions willing to build. Without that alignment, the gap between policy ambition and production reality will remain wide.

Adaptive Reuse: DC’s Downtown Housing Pivot: As office vacancy rates soared past 21 percent in 2024 and housing costs remained high, city officials turned to adaptive reuse, converting obsolete office buildings into residential units, as a dual solution.

With remote work hollowing out downtowns across the country, cities like Washington, DC are rethinking what central business districts can be. Mayor Bowser’s “Housing In Downtown” initiative, launched in 2023, aims to bring 15,000 new residents to the downtown core by 2028. The city offers tax abatements, faster permitting, and zoning flexibility for office-to-residential conversions, along with a $40 million fund to support feasibility and early-stage financing.

Progress has been modest. As of mid-2025, only a handful of projects had received approvals, and even fewer had broken ground. Developers cite hurdles including deep office floorplates that limit natural light and airflow, costly infrastructure retrofits, and conservative federal lending standards that undervalue mixed-use redevelopment.

For students at Georgetown’s Steers Center for Global Real Estate, based downtown, the effort offers a unique learning opportunity. Several students have toured active and proposed conversions with local alumni, gaining firsthand insight into both the promise and friction of turning offices into housing. From floor plan challenges to capital stack complexity, DC’s adaptive reuse push has become a case study in urban reinvention.

Other cities are pursuing similar strategies. San Francisco passed ordinances easing conversions in 2023 and added tax breaks for older buildings. New York amended zoning rules to increase flexibility in Midtown. Chicago is piloting grants through its LaSalle Street Reimagined program.

However, conversions remain niche. They work best in smaller, older buildings built before the 1980s with shallow footprints and large windows. Many high-end towers are too expensive or structurally rigid to convert. Even in high-demand cities like DC, costs remain a limiting factor.

Without more downtown housing, DC risks fiscal strain, vacant buildings, and declining street activity. But if even a portion of obsolete office stock can be repurposed, it could offer a blueprint for more walkable, mixed-use post-pandemic cities.

What Works, and What Fails?

Recent reforms, from zoning rollbacks to rent caps, show promise, but only coordinated action across all levels of government can close the gap. After years of inaction, American cities are testing new housing policies at scale. 

However, the results are mixed. 

What’s Working:

Zoning reform + streamlined approvals: Cities like Minneapolis and Austin show that pairing broader land use permissions with expedited permitting can unlock significant new supply. Denver and Seattle have similarly reduced approval timelines while boosting density in targeted corridors.

Flexible rent stabilization: States like California and Oregon have adopted moderate rent caps (e.g., 5–7% plus inflation) that offer tenant protections without scaring off investors. In contrast to St. Paul’s rigid cap, these frameworks often exempt new construction, preserving development incentives.

Public funding tied to execution: San Francisco’s $300M bond, New York’s conversion subsidies, and Florida’s Live Local Act have spurred real activity. Funding programs that come with clear targets and cross-agency coordination tend to perform best.

Pro-housing state legislation: In states like Washington, Massachusetts, and Montana, legislatures have overridden local zoning to legalize more units near transit, commercial corridors, or on single-family lots. While implementation varies, these top-down pushes have increased entitlement certainty, giving developers more confidence to invest, reduce pre-construction risk, and accelerate housing production in areas that had long been gridlocked.

What’s Failing:

Overly strict rent caps: St. Paul’s 3% hard limit (with no inflation adjustment or exemption for new units) froze construction and tanked investor confidence. Developers walked away from large projects, and the city was forced to amend the law within a year.

Inclusionary zoning requirements without financial considerations: Several cities (including San Francisco pre-2023) mandated affordability percentages so high that projects became infeasible. When inclusionary mandates outpace rental revenue or tax credit availability, development stalls.

Permitting reform with no subsidy: Los Angeles shows that faster approvals don’t mean faster building when capital is scarce. Nearly 40,000 units have been entitled through ED1, but fewer than 3,000 have started construction due to funding and land availability limits.

Conversions without planning support: Adaptive reuse policies flounder without clear guidance on building codes, financing tools, or target geography. In many cities, local permitting processes still treat conversions like custom exceptions rather than standardized opportunities.

The most effective jurisdictions treat housing as a system, aligning zoning, funding, permitting, and protections into a coherent strategy. Cities that isolate one lever, like rent control or zoning, often create new friction elsewhere. Those that coordinate across agencies, balance short-term relief with long-term supply. 

Conclusion: The U.S. has the tools to build housing at scale, it’s the coordination that’s missing

Decades of fragmented governance and political hesitation have led to shortages that now affect every income bracket. However, the last five years mark a turning point; cities are scrapping exclusionary zoning, states are forcing entitlement reform, and housing has become a top-tier voter issue in metros nationwide. If policymakers can align land use, financing, and tenant stability, the nation can ease cost burdens and restore mobility for millions. If they don’t, the affordability gap will keep widening, costing households security, cities talent, and the economy growth.