housing affordability: a world challenge

HOUSING AFFORDABILITY:A WORLD CHALLENGE

A Policy Priority of the International Housing Association

February 2021

HOUSING AFFORDABILITY: A WORLD CHALLENGE 1

1 internationalhousingassociation.org.2 internationalhousingassociation.org/members.3 Manifesto/BUILD-Europe, Housing: The European Challenge, A New Strategy, April 2019.

FOREWORDWhat is the IHA? The International Housing Association (IHA) is a unique housing policy and solutions forum. The IHA brings together leaders of the housing sector from countries around the world. Membership spans nations from six continents and includes both developed and developing countries. Together IHA members work to further the home building industry globally.1

Why Housing? The IHA members 2 are united in recognizing the value housing and homeownership hold for a country and a country’s citizens. Stable housing which addresses the financial position, needs and preferences of the population dramatically enhances everything from a country’s economic position to the health and education of the people.

ACKNOWLEDGEMENTThe IHA is not alone in recognizing the important role housing plays throughout the world. Many organizations, among them individual IHA members, regularly work to communicate the opportunities available through well thought out housing strategies.

The IHA applauds the efforts of BUILD Europe and the manifesto, Housing: The European Challenge.3 This “Housing Affordability: A World Challenge” document builds upon the work of BUILD Europe and further highlights the need for housing affordability on a global scale.

IMPACT OF COVID-19 PANDEMICThe IHA’s work to document the issue of housing affordability and share high-level insights regarding both the challenges and solutions addressing the issue began before the onset of the COVID-19 Pandemic. The IHA members continued work on this critical issue during the pandemic remotely as concerns about housing affordability and the need to address the issue will be with us during the pandemic and long after.

It should also be noted that the IHA members recognize the pandemic may have lasting impacts on the housing industry, consumers concepts and priorities with respect to “home”, and housing affordability. This document notes where such lasting impacts may materialize in the future in blue blocks. This document will also continue to be updated over time as issues change and emerge, and as the long-term impacts of COVID-19 on the industry and housing are better understood and potentially long-lasting.

HOUSING AFFORDABILITY: A WORLD CHALLENGE HOUSING AFFORDABILITY: A WORLD CHALLENGE2 3

WHY HOUSING AFFORDABILITY?Those who work to further the home building industry throughout the world are committed to providing the broadest population possible access to safe and decent housing that they can afford. Preserving housing affordability is a primary goal to which the global residential construction industry aspires and to which the Members of the International Housing Association (IHA) are committed to furthering.

The IHA defines housing affordability as the availability of housing which is reasonably adequate in standard and location for lower, or middle income, households and does not cost so much that a household is unlikely to be able to meet other basic needs on a sustainable basis4.

IHA members believe that housing affordability is a critical component in supporting a successful housing system. The IHA Housing Continuum5 provides a basic means for an international dialogue on best approaches to facilitate people moving along the continuum to improve their own socio-economic well-being and to contribute to improving the socio-economic well-being of an entire nation.

The IHA is committed to making certain that the global community remains focused on housing affordability as a critical issue which needs to be addressed as countries work to move citizens along the housing continuum. This document is just one of a number of attempts to make certain housing affordability is a global priority and is better understood so as to inform policies affecting homeownership and all other forms of tenure.

For many citizens, the concept and importance of “home” has become an even greater priority through the pandemic, further emphasizing the need for improved affordability for all.

4 IHA Statement of Intention in Support of Housing Affordability, internationalhousingassociation/statementsofintent/housingaffordability, August 30, 2019, p.1.5 IHA Housing Continuum, internationalhousingassociation/housingcontinuum, November 10, 2017, pp.1-3.

WHY HOMEOWNERSHIP?IHA members are committed to the movement of individuals along the Housing Continuum6, whether to market-rate rental housing or market-rate homeownership. However, the members recognize that homeownership, where available, provides a broader range of benefits to individuals, households, and communities.

Homeownership also remains the aspiration of the vast majority of citizens in most member countries. The benefits of homeownership are expansive, and include financial opportunities, labour and career advancement, enhanced health and personal safety, positive contributions to mental health, support through changing life stages, as well as broader positive social and community impacts.

During the pandemic, homeownership has offered more security as countries were in lock-down to varying degrees, and with other public health measures in place. Homeownership offered financial flexibility and security, with equity providing a backstop. Depending on housing type, interactions with others, as well as health and safety measures were easier to introduce and maintain.

While governments have rolled out support programs for renters needing income support and for homeowners needing to defer mortgage payments, homeowners are typically better able to absorb economic shocks because they have assets to draw upon and more control over their living space.

FINANCIAL BENEFITS Homeownership provides a broad array of financial benefits to individuals and their households.

Increased Personal Wealth Pursuit of homeownership is an opportunity to build personal wealth and financial stability while also fulfilling the essential need for shelter. Equity in a home is a tool that can improve individual and family financial well-being and contribute positively to intergenerational wealth.

Investment Opportunity The ability to purchase a home with a limited down payment allows a homeowner to build more equity, more quickly than they may earn through other forms of investment. The equity from homeownership can be a beneficial part of a suite of investments, some of which may require more initial outlay, or be less consistent, with fewer other benefits, such as providing shelter.

6 IHA Housing Continuum, internationalhousingassociation/housingcontinuum, November 10, 2017, pp.1-3.


Promotes SavingPreparing to pursue homeownership encourages households to save. Securing the funds necessary to support a down payment often require prudent financial planning that includes an active savings strategy. This in turn can lead to a better mentality towards savings for other purposes in the future. And either way, it is a “forced savings plan” over the life of the mortgage that overcomes basic human instinct to expend disposable income rather than save.

Eliminates Risk from Rent IncreasesOnce homeownership is secured, individuals and their households are shielded from the risk of rent increases, both scheduled and unanticipated. This certainty can further support thoughtful financial planning and the growth of personal wealth.

Long-Term Financial ObligationsHomeowners possess a long-term financial obligation that in itself alters their economic behavior, requiring deliberate planning for mortgage payments, maintenance, property taxes, and other costs over time, incenting long-term financial planning.

Improved Access to CreditFor many home buyers, the purchase of a home requires some form of mortgage financing. Individuals who qualify for such financing and continue to invest in their residential property are likely to be able to access additional credit when needed. Building more equity also means access to lower loan interest rate financing for other purchases and investments, through secured lines of credit and other financial tools.

Potential Tax BenefitsRecognizing the broad array of positive opportunities homeownership provides, many countries provide tax benefits designed to encourage home purchases. These tax incentives and or benefits not only benefit the community as will be outlined later, but also the financial position of the individual homeowner.

LABOUR BENEFITSHomeownership offers labour benefits through multiple avenues. Those saving to achieve homeownership often increase their participation in the labour force.

In addition to increasing labour force participation, homeownership appears to have other positive effects on job market outcomes. Studies of home owning households reveal a higher level of job market participation by women, including mothers.7

Additional research indicates that individuals owning their own home are less likely to become unemployed. Those that do become unemployed generally remain unemployed for a shorter period of time.8

And this is all before the impact that housing has on the broader labour market. Homeowners are more likely to purchase appliances, fixtures and furnishings as well as take advantage of a variety of expanded services, all which assist in further growing the labour market.

7 H. Yoshikawa, F. Ohtake, An analysis of female labor supply, housing demand and the saving rate in Japan, European Economic Review 33 (1989) 997-1023.J. M. Joesch, Children and the timing of women’s paid work after childbirth: A further specification of the relationship, Journal of Marriage and the Family 56 (1994) 429-440.8 N. E. Coulson, N. M. Fisher, Tenure choice and labor market outcomes, Housing Studies 17 (2002) 35-49.

PHYSICAL HEALTH & SAFETYThere is evidence that homeowners may benefit from better health and longer life expectancy.9 This may be attributable to the ability homeowners have to directly maintain their properties. Additionally, homeowners are able to better able to modify their dwellings to accommodate any physical concerns or accessibility issues. As homeowners do tend to be more embedded in their community, it is also possible that more awareness of local health resources in the surrounding area assist in enhancing their health.

MENTAL HEALTHHomeowners have noted that owning a home has a positive effect on an individual’s perception of themselves in terms of success, home and community. This being the case, some studies in the US note that homeowners report higher levels of life satisfaction which may also be referred to as feelings of increased personal dignity. 10

SUPPORT ACROSS ALL LIFE STAGESHomeownership provides benefits to homeowners and their broader households across all life stages.

Seniors not only benefit from the long-term investment opportunities provided by their homes, but as noted above, owner occupied properties are often better maintained and modified to suit occupant needs, reducing the risk for a variety of accidents.

The young people in owner occupied households benefit from a stable, consistent, living environment. Studies indicate they are healthier, perform better in school, graduate a higher rate, more of them move on to advanced education and have a lower experience of teen pregnancy.11

9 S. Macintyre, A. Ellaway, G. Der, F. Graeme, K. Hunt, Do housing tenure and car access predict health because they are simply markers of income or self-esteem? A Scottish study, Journal of Epidemiology and Community Health 52 (1998) 657-664.

S. A. Robert, J. S. House, SES differentials in health by age and alternative indicators of SES, Journal of Aging and Health 8 (1996) 359-388.10 S. Lane, J. Kinsey, Housing tenure status and housing satisfaction, Journal of Consumer Affairs 14 (1980) 341-65. W. M. Rohe, M. A. Stegman, The impacts of homeown-

ership on the self-esteem, perceived control and life satisfaction of low-income people, Journal of the American Planning Association 60 (1994) 173-184.11 T. P. Boehm, A. M. Schlottman, Does homeownership by parents have an economic impact on their children? Journal of Housing Economics 8 (1999) 217-232.


12 D. DiPasquale, E. L. Glaeser, Incentives and social capital: are homeowners better citizens? Journal of Urban Economics 45 (1999) 354-384.13 S. J. South, K. D. Crowder, Escaping distressed neighborhoods: Individual, community, and metropolitan influences, American Journal of Sociology 102 (1997) 1040-1084.

SOCIAL AND COMMUNITY BENEFITSThe positive impacts of homeownership are not limited to the individuals owning a home or their families living in the home. Communities also benefit from homeownership. Homeowners generally provide increased support to the various elements of their community, whether it be the environment surrounding the area in which they live, the public amenities available, or the services supporting their communities.

Homeowners are often motivated to participate in political activism, including voting. Similarly, homeowners are more likely to contribute social capital, through either volunteerism or donation. 12

Neighborhoods with a high percentage of homeowners often experience reduced crime rates. Such neighborhoods also tend to be more resilient and are more equipped to recover from natural disasters.13

WHAT KEY CONSIDERATIONS IMPACT HOUSING AFFORDABILITY?Chief among the key considerations impacting housing affordability are the financial position of those in need of housing, both current income as well as future income opportunities, and stability. Location of employment as well as transportation requirements and costs must also be considered.

It is worth noting that proximity to employment may shift as a priority due to COVID-19, in that if there is more working from home, lessening or eliminating commuting has the opportunity to change location preferences, with potential improvements in affordability.

However, a meaningful housing affordability strategy must also address a number of considerations beyond income and employment. Recognizing and providing for family situations which may include multi-generational family members or individuals with accessibility needs must be addressed. Providing consumers with homes in locations near work, services and transportation infrastructure must be considered in developing any successful housing affordability strategy.

WHAT COMMON CHALLENGES IMPACT HOUSING AFFORDABILITY?Though the specific details of each country’s housing affordability landscape differ, there are a number of common challenges experienced by all to one degree or another.

INCREASING COST OF PRODUCTIONThe increasing cost of the elements to construct homes (land, labour, materials) has a direct impact on housing affordability. Limited availability of land, often driven by restrictive land use policies, combined with a shortage of skilled labour and increasing material costs makes the construction of new homes increasingly more expensive14.

PLANNING REQUIREMENTS AND REGULATORY COMPLIANCEResidential construction is a highly regulated industry in most countries with compliance requirements from planning, throughout the construction process, and into occupancy. As these requirements increase, so too does the cost and the time required to produce housing15 16.

TAXES AND IMPACT FEESResidential construction, particularly new construction, often pays for the operational cost of the broader community through taxes and impact fees. Often these taxes and fees continue through the entire life cycle of the residence, from planning and production through occupancy. As countries continue to look to housing production to meet the financial needs of the community, fees and taxes can increase, negatively affecting housing affordability17.

In many countries, planning and regulatory compliance, as well as some taxes and impact fees are administered by sub-national governments. During the pandemic, government expenditures accelerated significantly, and revenues declined. As economies gradually return to normal, governments may look to the housing sector to raise additional revenues for broader community needs. This issue will need to be closely monitored for its known detrimental impact on housing affordability.

ACCESS TO FINANCINGAccess to reasonable financing, both for those producing housing and those purchasing housing, is necessary if housing affordability is to be preserved or furthered. Financial challenges resulting from the housing crisis which impacted many countries beginning in 2008 resulted in a reduction of financial support for housing by banking institutions in some countries. These financial restrictions still exist in some countries18.

14 REHDA Institute, Housing Forward – Understanding and Sustainable Prices, November 10, 2020, Executive Summary, pp. 2.15 CHBA Municipal Benchmarking Study, https://www.chba.ca/CHBA/Housing_in_Canada/The_Government_Role/Municipal_Benchmarking.aspx, September 22, 2020, pp.26-33.16 CBIC, O Custo Da Burocracia No Imovel, 2015.17 CHBA Municipal Benchmarking Study, https://www.chba.ca/CHBA/Housing_in_Canada/The_Government_Role/Municipal_Benchmarking.aspx, September 22, 2020, pp.35-39.REHDA Institute, Housing Forward – Understanding and Sustainable Prices, September 11, 2020, Executive Summary, pp. 3.18 C.D. Howe: Calibrating Macroprudential Policies for the Canadian Mortgage Market, https://www.cdhowe.org/sites/default/files/attachments/research_papers/mixed/Commentary%20570.pdf, November 2020, pp. 2-3.


DECREASED PUBLIC FUNDSEven as the need for housing increases around the world, the public funds committed to producing housing in many countries are decreasing. Decreased public funding places constraints on supply, which negatively impacts housing affordability.

SUSTAINABILITY/RESILIENCYHousing affordability addresses both the production and operation of homes. Homes produced utilizing cost effective sustainability and resiliency techniques could assist in addressing long term housing affordabilit

CONTINUING URBANIZATION Urbanization is a continuing global trend as populations in many parts of the world seek to reside in areas where employment, entertainment and services are more readily available. Supporting housing affordability in urban areas is particularly difficult as developers must address many of the challenges outlined here, inclusive of limited access to land for development.

SUPPLY CHALLENGESHousing supply impacts housing affordability in two ways. Limited availability of housing impacts the cost of housing and negatively impacts housing affordability. Supply limitations in certain areas and types of housing can drive consumers to compete for housing designed for either entry level or lower income consumers, again leading to increased cost and housing affordability concerns.

Mismatched housing supply also impacts housing affordability. Though cost effective housing may be available, it may not match the needs or preferences of buying public. Housing affordability is not served by building housing units in areas far from where viable employment is available to consumers or where transportation is limited. Additionally, building high-rise or multifamily units in an area where single family or low-rise housing opportunities are preferred by consumers may again lead to shortages and housing affordability concerns, though housing availability may exist19.

CHANGING LIFE REQUIREMENTSMuch like supply must address consumer needs and preferences if housing affordability is to be advanced, housing also must address changing life requirements. Housing that can be easily modified or is built to provide accessibility at all life stages assists in further preserving housing affordability.

The experience of fatality rates in seniors’ residences may further the desire of seniors to age-in-place rather than move to a group facility. There are also significant savings to the health care system from supporting aging in place (prior to COVID-19 and even more so now).

19 CMHC: Examining Escalating House Prices in Large Canadian Metropolitan Centres, https://www.cmhc-schl.gc.ca/en/data-and-research/publications-and-reports/examining-escalating-house-prices-in-large-canadian-metropolitan-centres, February 2018, pp 75-94.

ANSWERING THE QUESTION OF HOUSING AFFORDABILITYHow can sufficient housing be built that both meets the aspirations of citizens and is compatible with their income?

The benefits of and challenges in delivery housing are complex and varied. This being the case, it is not surprising that the answers to how to further housing affordability would also be complex and challenging.

POTENTIAL SOLUTIONSJust as the landscape of housing affordability differs in each country, the required mix of potential solutions needed to further affordability will differ in each country. The following provides a list of some of the solutions identified by IHA members.

LAND AVAILABILITYLand is a key cost of housing. Policies that constrain access to land increase the cost of housing production. Housing affordability is furthered as land becomes more available.

EncourageSmartReconstruction/Densification Smart reconstruction and densification in urban areas makes land available for housing development, supports historical urbanization trends and furthers housing affordability. Planners, policymakers and elected officials need to explore the issues involved in building a greater range of housing types that discreetly add density to existing zoning and neighborhoods. The types include smaller homes, smaller lots, and accessory dwelling units (ADUs).

Change Attitudes of NIMBYISM Changing the perceptions of those opposed to housing developments in their local area (“not in my back yard”) is necessary to secure the land required to further housing affordability. Engaging the broader community early in the planning and development process and regularly communicating the benefits of development assist in changing the attitudes of NIMBYISM.

Make Medium-sized Cities More Attractive Though smart reconstruction and densification practices will assist in addressing some of the housing required to support current urbanization trends, it is unlikely to meet all housing requirements. Efforts to make medium-sized cities more attractive through enhanced infrastructure, services, job opportunity and education would assist in transitioning some housing demand from large urban centers to areas where land is more available at a lower cost; a positive impact on housing affordability20.

20 Manifesto/BUILD-Europe, Housing: The European Challenge, A New Strategy, April 2019, pp. 42.


Repurpose Existing Properties Changing demands, populations, and industrial priorities often result in vacant or empty properties in a given city or region of a country. Repurposing these processes may provide a cost-effective means to address housing affordability. Repurposing a former shopping center or office building into multifamily residential units would make land and structures previously committed to other purposes available to housing21. The IHA members recognize that repurposing existing buildings could require more than simple modifications to structures. Such efforts may also require the modification of existing zoning or regulatory requirements .

Seek Balanced Environmental Protection Protection of the environment is important. However, protection of the environment at all costs is not appropriate. Countries must commit to pursuing thoughtful cost-effective measures that balance land restrictions and building regulations designed to protect the environment with the need to provide their citizens with housing that is affordable. Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It is therefore critical to still meet today’s needs, but to find ways to do so that reduce environmental impacts, and indeed can even be regenerative over time.

Encourage Long-Term Population Assessment and Land Strategy The need for housing affordability will be an ongoing demand well into the future. To better address this need, land strategies should be developed utilizing data addressing long-term population trends. Well thought out strategies addressing population growth and composition, migration patterns, infrastructure demands, industry requirements and thoughtful environmental concerns will go a long way to preserving housing affordability into the future.

CONTAINING COSTSContaining the cost of housing production is essential if housing affordability is to be preserved and furthered.

Limit Taxes and Fees In many countries, new housing construction pays for a disproportionate level of the funding of required infrastructure and community amenities which benefit broader populations. Governments must re-examine how these requirements are addressed in the future. Public purpose bonds or general rate levies or taxes are efficient and fair methods of funding long-lived infrastructure requirements that do not negatively impact housing affordability24.

Streamline Regulation and Approval Processes Residential construction is one of the most highly regulated industries in the world. Compliance with regulations directly impacts the cost of housing production and housing affordability. Sunsetting outdated and onerous rules while implementing thoughtful and cost effect ones will assist in further reducing the cost of production and preserving affordability25. Accelerating approval processes will also help get more supply built faster and reduce carrying costs to increase affordability.

Cost-effectiveEnergyEfficiencyStandards Housing affordability is a consideration at all stages of a home’s life cycle; planning, construction, and owner operation. The IHA recognizes the benefits of pursuing energy efficiency while maintaining housing affordability. Cost effective energy efficiency in homes can save energy, save money on utility bills and help to protect the environment by reducing the amount of electricity and other energy forms that need to be produced and transported. At the same time, to maintain affordability, the increase in the investment costs must be proportional to the energy savings achieved.

Increase the Supply of Trained Labourers In recent years the global residential construction industry has experienced a growing shortage of skilled trade workers. The reasons for this growing shortage are numerous and varied. However, the impacts on the housing industry are similar; increased labour costs and longer construction timelines, which also increase costs and negatively impact affordability26. Strategies must be implemented to secure the skilled work force required to address the needs of the world’s residential construction industry. A commitment to promoting the benefits of work in the field of residential construction, a safe and lucrative career, coupled with high quality training and career support will assist in bringing prospective trades people into the industry. The more skilled trades people available, the less costly and more efficiently housing can be brought online.

Implement Technology Solutions to Enhance Housing Construction Technology implementation has enhanced production efficiency across a broad array of indutries, residential construction included. As the use of additional technology tools and processes are approved for and promoted to residential construction, further cost and time efficiencies will be achieved. Such technologies may also assist in addressing the time and cost issues associated with the shortage of skilled labourers.

24 CHBA Municipal Benchmarking Study, https://www.chba.ca/CHBADocs/CHBA/HousingCanada/Government-Role/2020-09-21-Report-CHBA-Municipal-Benchmark-ing-Study.pdf, September 22, 2020, pp. 35-39.25 NAHB Study, Development Process Efficiency: Cutting Through the Red Tape, Abt Associates, November 30, 2015.

21 NAHB Case Study, Wildflower Terrace at Mueller, Austin, Tx, How Did They Do It? Discovering New Opportunities for Affordable Housing, December 2016.22 CMHC Rapid Housing Initiative, https://www.cmhc-schl.gc.ca/en/nhs/rapid-housing-initiative, September 2020. NAHB Study, Creating Housing for All, June 2018.23 Manifesto/BUILD-Europe, Housing: The European Challenge, A New Strategy, April 2019, pp. 53.


Support Housing Development and Construction Barriers to housing development have intensified, particularly in the high-growth metropolitan areas. The accumulation of such barriers has reduced the ability of many housing markets to effectively address growing demand and housing affordability. Government policies should be implemented which promote healthy, responsive, affordable, high-opportunity housing markets. Such policies include streamlining or shortening permitting processes and timelines, eliminating unnecessary construction requirements such as off-street parking provision, allowing accessory dwelling units, establishing density bonuses, and enacting high-density and multifamily zoning27.

Competitive Pricing of Building Materials The rising cost of building materials is harming housing affordability. Tariffs and trade restrictions on imported materials further increases the cost of housing production and intensifie affordability challenges.

With the housing affordability crisis before many countries, it is counterproductive to enact

policies that drive up the cost of housing. Governments are urged not to pursue, or where they exist curtail, tariffs and trade restrictions essential to the construction of homes.

There is no question that global supply chains have experienced disruptions due to the pandemic. Quarantine measures, self-isolation and restrictions on transport have impacted the production of new homes around the world.

At this time, it is unclear whether supply chain disruptions created by the pandemic will have

long-term impacts on the global housing industry in general or more specifically on housing affordability in the future.

26 Building the Dream: Labor Shortage and Its Impact on Housing’s Recovery and Affordability, The Hill, July 28, 2020.

27 CHBA Municipal Benchmarking Study, https://www.chba.ca/CHBADocs/CHBA/HousingCanada/Government-Role/2020-09-21-Report-CHBA-Municipal-Benchmark-ing-Study.pdf, September 22, 2020, pp. 35-39.

SUPPORT FINANCINGHousing affordability cannot be achieved without cost-effective financing for both builders and buyers.

Address Onerous Capital Requirements Capital requirements are often tightened after an economic crisis, such as that caused by the global housing crisis. Capital requirements for residential construction were tightened significantly in an effort to ensure that banks and depository institutions’ holdings were not dominated by investments that increase the risk of default. However, as the crisis improved, the capital requirements associated with residential construction were not sufficiently eased. If housing affordability is to be furthered in the future, capital requirements must be modified to more appropriately reflect the current risk limitations associated with residential construction.

Support Buyer Financing Cost effective, accessible buyer financing is critical if housing affordability is to be advanced. Solutions such as smart mortgage rules that strike an appropriate balance between financial system stability and excessive consumer debt allow responsible borrowers the opportunity to finance the biggest asset of their lives, their home, and thus further housing affordability .

Identify New Funding Alternatives There is no easy solution to the housing affordability challenge, and neither the public sector nor the private sector can solve it alone; they must work together to identify the financing streams necessary to support housing development. Financing partnerships can involve many different players, including land trusts, government housing authorities, and even employers. Collaborative funding efforts supporting housing development will create benefits and long-term successes for the broader community.

Local Funding for Development Local jurisdictions should support both thoughtful future looking planning strategies which further housing affordability as well as commit funding for such developments. Additional funding opportunities from local grant offerings or existing not for profits could also be used to support local development.

Balance Financial System Risk with Ownership Following the world housing crisis, the rules supporting access to funding by homeowners were modified in many countries in an effort to reduce lender risk. These efforts have greatly reduced the funding available to buyers. If housing affordability is to be preserved, lending guidelines must be altered to allow for reasonable flexibility by lenders which acknowledgement that “one size does not fit all.” A borrower’s creditworthiness should be determined based upon sound, accurate data and sufficient documentation to ensure qualified borrowers are not excluded from obtaining a mortgage.

28 C.D. Howe: One More Case for Longer-term Mortgage: Financial Stability, https://www.cdhowe.org/sites/default/files/attachments/research_papers/mixed/e-brief%20299.pdf, January 2020, pp 1-10.


SUPPORT BUILDERS AND BUYERSHousing affordability requires support of both production (builders) and consumers (buyers).

Accelerate the Planning Process Builders can only advance housing affordability if they are able to efficiently complete the building process. Streamlining and expediting development approvals, particularly those addressing affordable projects, will go a long way to both advancing affordability and meeting the existing need for housing on a timely basis29. While COVID-19 delayed many approval processes, as technology began to be used more, in many instances more efficient ways to expedite the approval process have been identified. These efforts should be maintained and expanded.

Limit the Legal Exposure of Housing Producers Home construction is a complex process requiring a high level of training and skill by a builder who relies on the products used in the construction process. Builders using best practices in construction and following product installation guidelines should have limited legal exposure. Limiting the time during which a housing producer is legally exposed coupled with providing the industry cost-effective access to liability insurance will limit the overall cost exposure of builders and enhance housing affordability. Progressive warranty programs that protect both the buyer and the builder, and in so doing advance the interests of both, have many advantages, including positively impacting housing affordability.

Limit Taxation

As discussed previously, residential construction, particularly new construction, is often overtaxed in support of community infrastructure and resources. Limiting the tax burden of both builders and buyers will significantly enhance housing affordability. New or expanded infrastructure and amenities used by the entire community should be funded by the entire community, not just by new construction.

ADDRESS CONSUMERS PREFERENCEHousing affordability is only successfully achieved when consumers are able to and want to take advantage of the available housing opportunities30.

Build WHERE Consumers Want and Need to Live Land is a key component of housing affordability. However, building houses based purely on low-cost land alternatives does not support the need for housing affordability. Consumers will only take advantage of opportunities of housing in places they want or need to live. Housing that appears to fit the purchase requirements of a household but is located far from work, schools and required services does not support the long-term need for housing affordability. Land strategies and home builders must build where consumers want and/or need to live if true housing afford-ability is to be achieved.

Build WHAT Consumers Want and Need Consumers will take advantage of housing opportunities where they want and/or need to live if the housing offered meets their wants and needs. Housing affordability falls short if only multi-family high rise opportunities are available and low rise or single-family units are preferred. Furthermore, high-rise construction is more expensive than low-rise, hence on a unit-of-living-area basis, high-rise units are often not less expensive but more expensive. Governments and industry members must educate themselves on consumer preferences and requirements before allocated resources to support housing construction.

Build Housing Supporting a Digital Lifestyle A digital lifestyle is no longer a consumer preference or want but a need. Housing affordability is only achieved if consumers are able to take advantage of the work opportunities, education and resources available through the internet. Housing must support connectivity through a variety of digital providers if it is to meet the needs of today’s consumer. The COVID-19 pandemic saw a significant portion of the world’s population engaging with work, schooling, retail and services through the internet. Though the full impact of the pandemic on ong-term housing trends is as of yet unknown, it is likely that the demand for reliable access to digital resources at home will only increase in the future.

Support Transportation Needs If housing affordability is to be successful it must support the needs of the consumers for which it is built. Transportation options allowing residents to easily access work, education, retail and other services must be a requirement if housing affordability is to be furthered. Recent trends have seen a growing number of consumers looking to residential solutions that limit the need for personal transportation with individuals either walking to obtain services or utilizing the internet to connect with resources or work. The pandemic, at least initially, furthered this practice with a significant portion of the public addressing their day-to-day tasks, including work, through the internet. It is still too early to determine the lasting effects the pandemic has had on the broader transportation needs required to support housing affordability.

28 CHBA: 2020 Home Buyers Preference Survey, https://www.chba.ca/CHBA/Publications/Home_Buyer_Preference_Survey.aspx, September 2020. (pre-COVID survey period).29 CHBA Municipal Benchmarking Study, https://www.chba.ca/CHBADocs/CHBA/HousingCanada/Government-Role/2020-09-21-Report-CHBA-Municipal-Benchmark-ing-Study.pdf, September 22, 2020, pp. 26-33.


URBANIZATIONUrban centers provide employment opportunities, education offerings and a variety of entertainment and services which consumers both want and need. If housing affordability is to be advanced, further urbanization must be supported.

MakeSmartDensificationEasier Smart densification in urban areas makes land available for housing development, supports historical urbanization trends and furthers housing affordability. Planners, policymakers and elected officials need to explore the issues involved in building a greater range of housing types that discreetly add density to existing zoning and neighborhoods. The types include smaller homes, smaller lots, accessory dwelling units (ADUs), and more support of the “missing middle”.

Recycle Government, Commercial and Industrial Properties Changing demands, populations, industrial priorities often result in vacant or empty properties in a given city or region of a country. Repurposing these properties may provide a cost-effective means to address housing affordability. Repurposing a former shopping center or office building into multifamily residential units would make land and structures previously committed to other purposes available to housing.

Migration, Immigration and Population Growth Effectively advancing housing affordability over the long-term requires thoughtful land and development strategies that are built upon data addressing current and future population trends. These trends must consider not only population growth and composition, but migration patterns as well as future immigration. These trends will impact which urban area require expansion of infrastructure and housing opportunities31.

Support Mid-sized Cities (Move Demand) Supporting urbanization through smart reconstruction and densification practices is unlikely to meet all housing requirements. Efforts to make medium-sized cities more attractive through enhanced infrastructure, services, job opportunity and education would assist in transitioning some housing demand from large urban centers to areas where land is more available at a lower cost; a positive impact on housing affordability.32

The pandemic resulting in the move to more remote working may further support movement to mid-sized cities in the future.

Implement Multi-Dimensional City Plans

Creating housing and the infrastructure required to support it must address a variety of consumer and community priorities if it is to effectively further housing affordability. Multi-dimensional city planning must address not only shelter needs but technology requirements, transportation, education, environmental concerns, and other community considerations.

As noted previously, the pandemic has furthered recent consumer trends limiting the need for personal transportation with individuals either walking to obtain services or utilizing the internet to connect with resources or work.

31 NAHB Study, Creating Housing for All, June 2018.32 Manifesto/BUILD-Europe, Housing: The European Challenge, A New Strategy, April 2019, pp. 42.

Limit Regulatory Hurdles Builders can only advance housing affordability if they are able to efficiently complete the building process. Limiting the regulatory hurdles required by residential builders is essential to advancing affordability and meeting the existing need for housing on a timely basis. This is particularly true in urban areas.

Smart and Green Cities Building cost-effective, sustainable cities, close to existing infrastructures, will address both environmental concerns and housing affordability. Not only do such cities address trends towards urbanization, they also reflect the aspirations and expectations of a growing number of citizens, resulting in properties that effectively answer consumer preferences.33

AN ONGOING COMMITMENT TO HOUSING AFFORDABILITYHousing is a complex subject which delivers a variety of benefits to both individuals and communities ranging from financial opportunities to positive social and community enhancements. This being the case, furthering housing affordability, the ability of citizens to obtain housing that meets their aspirations and is compatible with their income, must remain a global priority.

The IHA Membership remains committed to elevating the issue of housing affordability by:

• Identifying and sharing common challenges IHA member organizations confront in meeting their individual country’s housing needs.

• Committing to sharing successful strategies implemented to address the above noted challenges shared.

• Exchanging knowledge and best practices regarding tools and techniques designed to address the development of housing affordability – prior to construction, during the construction phase and over the life of the structure.

• Addressing practices which directly and negatively impact housing affordability such as government-imposed fees and taxes, and land use restrictions.

• Mentoring and supporting Member Organizations as they actively address housing affordability challenges locally.

• Further raising the international focus on this critical housing need.34

33 Manifesto/BUILD-Europe, Housing: The European Challenge, A New Strategy, April 2019, pp. 53.34 IHA Statement of Intention in Support of Housing Affordability, internationalhousingassociation/statementsofintent/housingaffordability, August 30, 2019, p.1.

INTERNATIONAL HOUSING ASSOCIATION

1201 15th Street NWWashington, DC 20005

1+ (202) 266-8182

housing affordability: a world challenge

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