National Infrastructure Bank Builds Adequate Affordable Housing 

$700bn for 7mn units

The housing crisis and homelessness continued flashing red in 2023, while legislators had no adequate plans to combat it. 

U.S. homelessness surged to a record high of 653,000 persons on a single night in January, including a 16% rise in the homeless rate for children.  The surge was most severe in California, Oregon, and Arizona. Nearly two-thirds of renters in the bottom income quintile now face "severe cost burdens" according to a new Harvard study, meaning they spend more than half of their income on shelter. 

Another HUD study found that low incomes and high rents had placed 8.5 million Americans on the brink of becoming homeless.

Meanwhile, three main federal programs for the neediest renters — public housing, Section 8, and Housing Choice Vouchers — now serve 287,000 fewer households than they did at their peak in 2004. That's a 6 percent drop, while the number of eligible households not receiving aid grew by one-quarter to 15 million.

Nowhere is the housing problem more severe than in California, the most populous state where one-third of all homeless people live. California boasts the nation's highest rental and home purchase costs, and least friendly zoning rules that are shown to inhibit new construction. The state needs anywhere from 1.3 million new affordable units (targeted to the very lowest income earners), or up to 2.3 million more units (for low plus middle-income earners) to fully satisfy current pent-up demand.

However, California's $68 billion budget deficit, estimated to extend over the next several years, suggests that no new financing for affordable housing is likely to be arriving any time soon. And the private sector is not building low-cost units in the absence of government subsidies.

A $5 trillion National Infrastructure Bank, however, will build them all. It can work with local jurisdictions like Los Angeles and San Francisco to finance new mixed-use apartment buildings or retrofit empty office buildings, with cross subsidies built into the loan contracts to ensure that new units remain sustainably affordable.