Without access to a safe, stable, and affordable place to live, people lack the foundation for financial, physical, and emotional well-being. Currently, however, too many Americans struggle to find affordable housing, and the challenge is escalating as costs continue to rise. According to the U.S. Chamber of Commerce, the United States has a shortfall of 4.7 million homes, and nearly a third of households are overburdened by housing costs. Twenty-six states have fewer than 4.7 million residents. If this trend in housing continues, it will prove ruinous for the American economy.
Housing is fundamental to financial, physical, and emotional well-being. Yet, the path to solving the housing crisis is not one-dimensional. It requires an understanding of where existing models have failed and the construction of a better framework. Two models have shaped American affordable housing for a generation, and the failure of both systems is unfolding in real-time, according to Will Blodgett.
Public Housing Authorities, which manage some of the country's largest affordable portfolios, often face significant challenges in funding repairs, modernisation, and expansion. This is not a criticism of these vital institutions, but rather an acknowledgement of the structural constraints under which they operate. Blodgett reported that during his time at the New York City Housing Authority, the largest housing authority in the country, he experienced first-hand that managing approximately 177,000 homes with a limited budget within a massive bureaucracy is extraordinarily difficult and there is no easy answer.
The Role of the Private Sector and the Need for Cooperation
The private real estate sector is primarily driven by market dynamics, which can lead to massive displacement when affordability agreements expire and rents rise. Private capital excels at mobilising resources, managing risk, and executing projects at scale. Left to market forces alone, however, it is not designed to preserve affordability indefinitely, especially when housing demand and rents are rising exponentially. In this environment, no single entity, neither the developer acting alone nor government agencies, can be fully effective.
Only through collaboration can the problem truly be addressed. Will Blodgett emphasised that a bad deal with good partners can become a good deal, while a good deal with bad partners always ends in a bad deal. Ultimately, successful affordable housing development requires the understanding that this is a business built on partnerships. The strongest projects are based on aligned incentives, shared goals, and trust between public and private stakeholders. As every major city nationwide faces a worsening housing shortage, public and private partners, united by the common goal of halting this spiral, must work on creative solutions to bring about meaningful change.
Financing Strategies for Housing Preservation
The public sector, guided by its policy objectives, must leverage the expertise of the private sector and collaborate in the implementation of mission-driven developments. While there is no universal approach, several innovative programmes and projects can serve as models for the growth and improvement of housing stock nationwide. In the discussion about the housing crisis, most conversations revolve around building new homes, but too little is said about preserving the affordable housing that already exists – and this might be the most overlooked lever the country possesses.
Each year, affordable housing is lost when regulatory agreements expire, properties transition to market-rate, or buildings are so burdened by deferred maintenance that they are no longer viable as affordable housing. According to the Harvard Joint Center for Housing Studies Report 2026, approximately seven million affordable rental units have disappeared nationwide since 2014. Some were converted to higher-rent units, some were lost due to underinvestment, and many simply aged out of the affordable housing stock, with too little new affordable housing being added to replace them.
Replacing these homes is by no means simple. The development of new affordable housing is costly, time-consuming, and often slowed by a complex web of regulatory requirements, permitting processes, financing challenges, and community opposition. Consequently, the affordable housing crisis is not just a production problem, but also a preservation problem. While increasing housing supply remains essential, protecting and reinvesting in existing affordable housing is equally important to meet the growing need.
- —Low-Income Housing Tax Credits (LIHTCs): One of the most successful programmes in American history, where federal tax credits are awarded to states and then passed on to developers to generate equity for affordable housing projects.
- —Tax-Exempt Bonds: State Housing Finance Agencies issue bonds which, when combined with the 4-percent LIHTC credit, create a financing structure that enables the acquisition, renovation, and recapitalisation of existing affordable housing.
- —Project-Based Section 8: Subsidies tied to the property, ensuring rental payments for low-income households.
- —Payments in Lieu of Taxes (PILOT) agreements, tax abatements, and grants: Other public incentives that promote the large-scale preservation of affordable housing.
Proven tools are available to tackle this existential threat to the existing affordable housing stock. The public-private financing architecture comprising LIHTCs, tax-exempt bonds, project-based Section 8, PILOT agreements, tax abatements, grants, and other public incentives is the mechanism through which housing can be preserved at scale, and families, seniors, and working tenants can be kept in their homes for the long term.
