A debated more or less proven truism is that Yupik and Inuit people used many words that the English language nests under one term, "snow."

English vocabulary includes another word, affordability, that does outlier service in its own language. Merriam Webster adds this tidbit to help clarify the word by definition.

affordable housing [=housing that is not too expensive for people of limited means]

People whose livelihoods draw from the economic and business lifespring of making homes and communities in towns and big cities and counties and states throughout the land have lots of different uses for this word.

It's only natural. Housing is its own unique domain among assets that trade as consumer durables and require physical real estate and are necessary to one and all people, regardless of means.

Affordability must stretch itself in umpteen-umpteen directions far and wide, from acres and acres to 280 sq ft, from median household incomes to seven-figure bonuses to the line for public assistance, and from mobile home parks to gated communities to urban mixed income master plans to homeless shelters.

Capitol Hill, and kitchen table, and 60 Wall Street, and Fed governors, and Town Hall, the gymnasium public hearing, and unemployment office – not to mention construction companies that need to procure and assemble materials, products, real estate, labor hours, permitting and inspections, insurances, financing, marketing and selling resources and many other inputs – all mean something different when they say the word affordability.

The question here has to do with whether our use of the term affordability shapes the way we see and experience reality, or the opposite. Is there a shared common denominator nature to reality for which we can agree to pursue solutions that fully activate both free-market and public and non-profit sector resource pools to address:

• there are not enough homes, period, and Catch-22 zoning, capital investment, and economic constraints assure that that condition will continue indefinitely
• building too few homes of all types today is a sure bet to guaranty that decades from now housing's affordability crisis will be algorithmically worse than today.
• attainability at market-rate levels of housing and real estate can and do exert profound, positive multiplier effects that ripple across the economy in the form of small business formation, employment, financial mobility, etc.

Slowing building tightens the knot, and not slowing demand turbocharged by easy money frays the rope.

My worry is that homebuilders -- whose incalculably valued contributions in local, regional, and broader economies involve shouldering enormous upfront private sector financial investment to catalyze many sectors worth of business activity to keep the engines of social and financial mobility driving toward attaining the American Dream – may find themselves in a stand-off with their future, people struggling to get by.

My worry is that the "haves versus have-nots" tensions that are present in our lives and work at all times and for all time, show signs of pitching into a hole so deep it may take years to dig out of.

The worry comes from having learned from you – builder, developer, investor, lender, manufacturer, distributor, partner executives – over the years that healthy housing markets mean people up and down the income continuum need access to housing, and that activity at the lowest-cost and price tiers are fundamental to sustainable activity at every other tier.

We know that's very much not how the housing market has worked over the past 10 to 12 years coming out of the Great Recession. In that time, businesses have worked, and thrived, and grown, and spread their impact deep and wide.

Still, this next spell ahead, a scenario that would spread the gap even further between "haves vs. have-nots" and further raise the barriers to cross from have-not to have is a spectre that feels ever more real.

And it feels indefensible – both as business strategy that must seed sustainability and resilience into value creation beyond the next quarterly earnings release or financial report and as a matter of common sense.

Affordability is not someone else's business. It is all of ours. In that light, I wanted to share, in excerpt form, some of the testimony from a hearing this week – Wed. July 13 -- on The Hill. It was hosted by U.S. House of Representatives Ways & Means Committee chairman Rep. Richard Neal (D - Mass), and it was entitled, Nowhere to Live: Profits, Disinvestment, and the American Housing Crisis.

Participants speaking as "witnesses" included: Dr. Elora Lee Raymond, Urban Planner and Assistant Professor in the School of City and Regional Planning in the College of Design at Georgia Tech, Dr. Akilah Watkins, President and Chief Executive Officer for the Center for Community Progress, Dr. Christopher Herbert, Managing Director, Joint Center for Housing Studies of Harvard University,
Audra Hamernik, President and CEO of Nevada HAND in Las Vegas, NV, Edward J. Pinto, Senior Fellow and Director of the American Enterprise Institute Housing Center.

You can find full transcripts of their testimony here.

In the word-cloud of their collective remarks, witnesses' use of the word "affordability" occurred in many of the contexts and interpretations, its relativism, and its absolutes that you're all so familiar with. Still, at a moment – in mid-year 2022, when so many forces are grinding where they're headed – the word can and should mean more to the people who are perhaps among the most capable business and cultural leaders in history to impact an arc otherwise headed to a long, sad era for housing in America.

In their own words:

Dr. Elora Lee Raymond:

Homeownership is crucial for households to build housing wealth. Because a home is the largest purchase most households make, and often the only leveraged investment or investment of any kind, housing wealth forms the majority of household portfolios. Net housing wealth for the median homeowning household is nearly half (47%) of median household net wealth for homeowners (SCF, 2019). This equity is an important source of financial stability, which can be tapped during financial emergencies such as health crises; to support college tuition, retirement, and inheritance for the next generation (Doling & Ronald, 2010).

Because home equity is such a large component of household wealth, gaps in homeownership and home appreciation contribute substantially to the racial wealth gap. Homeownership rates vary significantly by race. Seventy-four percent of white households own homes, compared to 48% of Hispanic households, and 45% of Black households. The wealth gap is further exacerbated by racial differences in home equity for those who do own homes. The median homeowning white household has $230,000 in housing wealth, far higher than the average Hispanic household ($200,000) or the average Black household ($150,000) (SCF, 2019). Some estimate that whether or not a household owns a home is a more important component of wealth inequality than income or education (Shapiro, Meschede, & Osoro, 2013). Protecting communities of color is important too: research suggests that divergent returns to homeownership is the number one contributor to the growing wealth gap between white and Black families in recent decades (Oliver & Shapiro, 2006; Taylor, Kochhar, Fry, Velasco, & Motel, 2011). Although incremental growth in the homeownership rate may not be sufficient to close the racial wealth gap, declining homeownership threatens to reverse existing progress (Derenoncourt, Kim, Kuhn, & Shularick, 2022).

Dr. Akilah Watkins

Communities experiencing systemic vacancy often become stuck in a negative cycle where vacant, abandoned, or deteriorated properties intensify poor living conditions impacting the local economy, community fabric, housing stock, and the local tax base. This in turn fuels neighborhood challenges and increases levels of vacant properties.3 When we consider these neighborhood challenges, we must consider both the physical distress of land and property, and the resulting human distress – the impact on community residents as a result of the physical deterioration around them.

There are currently more than 5.7 million vacant units throughout the U.S., and those units are often concentrated in communities of color and small- and mid-size neighborhoods.4

Our nation’s historic land ownership policies and their accompanying legal systems perpetuate this cycle of vacancy. Economic crises, inequitable government decision making, and natural disasters exacerbate systemic vacancy as well. This shift towards systemic vacancy can happen over years (e.g., after a major factory closes) or overnight (e.g., as happened in New Orleans with Hurricane Katrina).

Dr. Christopher Herbert

Given the high share of people of color with low and moderate incomes, the supply shortage of modestly priced homes discussed above poses another barrier to homeownership. Further adding to the supply constraints on homeownership is the lack of development of new homes and rehabilitation of older homes in low-income communities where house values have been diminished by decades of underinvestment so that they are currently too low to support new development.12 However, given the high degree of residential segregation by race, these communities are home to a large share of the nation’s population of people of color and thus are areas where many would-be homebuyers would like to live if good housing opportunities existed. Efforts to support new development in these communities is needed to turn around the market dynamic that has reduced existing home values.

Consequences of High Housing Cost Burdens

The growing incidence of households facing housing cost burdens means more lower-income households struggle to meet their basic needs. As documented in our recent America’s Rental Housing 2022 report, the amount renters have left over after paying for housing drops sharply with income. 13 In 2019, households earning $75,000 or more had $7,400 to spend each month after paying for rent and utilities. Renters earning between $45,000 and $75,000 kept $3,550, while those earning between $30,000 and $45,000 kept $2,000. But renter households with less than $30,000 in income had just $490 a month to cover the costs of food, healthcare, and all other necessities—and if they were cost burdened, they had only $360 each month to live on after paying for housing.

Audra Hamernik

A lack of affordable housing and a limited scale of housing assistance programs have contributed to the current housing crisis and is a leading cause of homelessness. In Nevada, we have over 3,400 unsheltered homeless individuals every night. When looking at solutions to this chronic problem, permanent supportive housing (PSH) is a proven intervention that provides affordable housing assistance with case management and wraparound services that adequately connect people with community-based health care, treatment, and employment services. The connection between housing and health outcomes has become more prevalent in recent years, and by using Medicaid funds for tenancy support services, more individuals can secure and remain in stable housing, leading to improved health outcomes and a reduction in care costs. PSH has been shown to lower public costs associated with the use of crisis services such as shelters, hospitals, jails, and prisons.

Affordable Housing Barriers:

There are a broad range of barriers that hinder the production and efficiency of affordable housing developments. For Nevada, these barriers include the current level of capital investment in existing resources, the availability of long-term rental assistance, land availability, Medicaid funds for tenancy support services, and more recently, supply chain challenges.

Edward J. Pinto

The current single-family housing boom, which began in 2012, was entirely foreseeable and was first noted by the AEI Housing Center in 2013. Since then, the housing market has been marked by too much demand chasing too little supply. Yet the policy response has been to boost demand even more: Federal housing agencies have loosened underwriting and the Fed has pursued zero interest rates and multiple rounds of quantitative easing, continuing even when the housing market began to appreciate at 16% in July 2021 In May 2022, home price gains were 17% and are only now expected to slow down as the Fed reverses these policies.

As a result, homeownership has gotten further out of reach for many lower-income and minority Americans. Consider that since 2012 wages have grown by 38%, but entry-level home prices have increased about 160%.1

This out-of-control price spiral means increased competition for fewer and fewer affordable homes. Potential entry-level buyers are increasingly pushed to the sidelines as they cannot afford to compete with more deep pocketed individuals, who experience the same competition, but higher up the price spectrum.

Clear – whatever part of a political spectrum you may find yourself on – is that private sector, public sector (local, state, federal), and not-for-profit sector, and community sector are necessary parts any way for the housing business community to drive solutions.

Affordable, when it comes to housing, is in the dictionary with an unambiguous meaning. What that means for housing's leadership and those stakeholders they can lead and influence has to do with whether they want it or not.

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