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In fact, that difficult fact is what fed the desire to create sub-prime mortgages – since we could not increase average wages and we could not lower the costs of building a house, the home finance industry found a way to bridge that gap by letting less money buy more house (temporarily).  The recession may narrow that the gap by deflating home sale prices and bringing them a little closer to the buying power of some households, but it doesn’t change the basic mismatch between wages and housing construction costs.  And the problem will get worse, because global economic pressures will continue to push wages down and the burgeoning demand (especially from the exploding middle classes in China, India, and elsewhere) will keep driving the price of housing inputs up.

cities are asking for broader and more powerful tools to address housing affordability. 

What can local government do?  It cannot solve the macro-economic problem, but it can remove barriers that drive housing prices even higher than they need to be.   Minimum lot size and minimum house size requirements are two of the main culprits.  Artificially low multi-family densities are another, and narrow definitions of allowable housing types are a third.

The simple fact is that economic pressures are going to force many American households into smaller single-family units and sometimes into multi-family housing even if they would prefer to buy something larger.

Responsible cities will find ways and places where that can happen and will revise their zoning to allow it to happen in ways that strengthen the community.  Local governments can also remove barriers to modern modular homes, co-housing, live-work products, cottage housing, and a variety of innovative smaller home options emerging to serve our aging population.  Other innovative products are described in more detail in A Better Way to Zone.  These are not just “quick fixes” — they can result in long-term changes in the American housing stock that responds to changing economic realities. 

The long-term housing affordability crisis is not going away, and responsible local government will use this “breather” from development pressure to rethink their approach to the issue and to re-evaluate the housing barriers embedded in their zoning and subdivision controls.