What Would It Take To Close The Housing Supply Gap In The Next Five Years, While Addressing The Nation’s Affordability, Climate Sustainability, And Resiliency Goals?
Introduction
The United States finds itself in a perfect storm of crises. On one hand, we have a staggering housing supply gap that has driven rents and home prices to historic highs, fueling an explosion in homelessness and cost burdens. On the other hand, the homes we do have are aging, energy-inefficient, and increasingly vulnerable to climate disasters. According to a pivotal 2025 article in Housing Policy Debate by Carolina Reid, Carlos Martin, Christopher Rausch, and Seumalu Elora Lee Raymond, addressing these issues in the next five years requires more than just building more houses. It demands a fundamental shift in federal policy, one that merges affordability, climate sustainability, and resiliency into a single, coherent strategy.
The authors argue that while the lack of supply is a root cause of today’s housing pain, a simplistic "build more" agenda is doomed to fail. Instead, closing the housing supply gap by 2030 requires a four-pillar approach: expanding lower-cost subsidized housing, promoting infill development over sprawl, aggressively preserving and retrofitting existing homes, and building local governmental capacity. Without this integrated vision, we risk exacerbating racial inequality, increasing carbon emissions, and leaving millions of families in vulnerable, unhealthy homes.
The Scale of the Problem: More Than Just a Numbers Game
The data is sobering. Over the past decade, the U.S. added only 1.1 million housing units annually 27% lower than the three previous decades. The number of cost-burdened renters (those paying more than 30% of income on housing) is at an all-time high, and homelessness in 2023 was worse than any year since 2007. Furthermore, the homeownership gap between Black and white households is larger today than before the Fair Housing Act was passed.
But the affordability crisis is not occurring in a vacuum. The average American home is 42 years old the oldest on record and with a typical lifespan of 61 years, millions of units are approaching demolition age. These older homes are not only deteriorating in quality, leading to health issues like lead exposure and mold, but they are also energy sieves, contributing massively to greenhouse gas emissions. Compounding this, sprawling development patterns have dominated growth; between 1990 and 2018, over 80% of new supply came from larger homes in low-density suburbs. This car-dependent model undermines climate sustainability by locking in high transportation emissions.
Therefore, the authors stress that any serious attempt to close the housing supply gap within five years must directly confront the trade-offs between building fast, building green, and building equitably.
Pillar One: Targeting the Missing Middle and Subsidized Supply
One of the most critical arguments in the paper is that the private market, left to its own devices, will never solve the affordability crisis for low- and moderate-income families. Market-rate development, constrained by high construction costs, land prices, and required investor returns, almost always produces housing at the higher end of the price spectrum. This is what economists call "filtering" the idea that new luxury units eventually become old, affordable units. While filtering does occur, it is too slow and uncertain to help the millions of families needing relief today.
The federal government, the authors argue, is uniquely positioned to change this calculus. They recommend leveraging tools like the Federal Housing Administration (FHA) and Government Sponsored Enterprises (GSEs) to reform underwriting for condominiums, small multifamily buildings, and accessory dwelling units (ADUs). By lowering the cost of capital for these "missing middle" projects, the government can stimulate infill supply that is naturally more affordable.
More radically, the paper calls for a new production program specifically for rental and entry-level for-sale housing. This could take the form of social housing models publicly developed or supported housing that remains permanently affordable. The success of pandemic-era innovations, such as converting hotels and motels into permanent supportive housing in California, shows that adaptive reuse can deliver units faster and cheaper than traditional construction. To truly close the housing supply gap for the poorest households, the federal government must expand public subsidies, including the Low-Income Housing Tax Credit (LIHTC) and rental vouchers, while streamlining the bureaucratic barriers that often delay these projects for years.
Pillar Two: Confronting Sprawl to Achieve Climate Sustainability
You cannot solve the climate crisis without solving the housing crisis, and vice versa. The paper is explicit: deregulation without incentives for infill is a recipe for disaster. If states simply remove zoning barriers without directing where growth occurs, we will see an acceleration of sprawl more single-family homes on the urban fringe, more vehicle miles traveled, and higher per-capita emissions.
The climate sustainability goal demands that new supply be concentrated in infill locations, particularly near transit, employment centers, and existing infrastructure. More than 80% of the housing increase from 1990 to 2018 was in low-density suburbs; reversing this trend is essential. The authors point to research showing that multi-family structures, smaller units, and higher-density neighborhoods drastically reduce energy use and carbon footprints.
To achieve this, the federal government should tie its transportation and infrastructure dollars to housing reforms. For instance, allowing Federal Transit Administration (FTA) grant recipients to use funds to buy land for affordable housing near new transit lines would reduce displacement risks and lower the carbon intensity of new development. The Biden-Harris administration’s "PRO Housing" program which provides grants to communities actively removing barriers to affordable housing is a model that should be expanded and strengthened. By aligning housing investments with climate goals, the federal government can ensure that closing the housing supply gap also helps meet the nation’s emissions reduction targets.
Pillar Three: Preservation and Retrofits-The Forgotten Half of the Equation
Perhaps the most underappreciated aspect of the paper is its focus on the existing stock. Even if we built 2 million new homes a year, the 145 million existing units would remain the dominant source of housing for decades. Yet federal policy has historically obsessed over new construction while neglecting preservation. This is a critical error, especially given the goals of resiliency and climate sustainability.
The authors highlight that older homes are disproportionately occupied by low-income households and households of color. These homes suffer from deferred maintenance, lead paint, mold, and structural inadequacies. When disasters strike, hurricanes, wildfires, heatwaves these are the homes that fail. The cost of disaster repairs has nearly tripled since 2000, and property insurance is becoming unaffordable or unavailable in high-risk areas. This is not just a housing issue; it is a resiliency crisis.
To address this, the federal government needs a "Partnership for Advancing Retrofit Technology" (PART) a nod to the failed PATH program of the 1990s. This R&D initiative would focus on innovations for existing homes: better flood-proofing, fire-resistant materials, modular retrofits, and energy efficiency upgrades. The Inflation Reduction Act (IRA) provided historic funding for home decarbonization (heat pumps, electrification, weatherization), but that money is only useful if there is a workforce and a delivery system to deploy it.
Furthermore, the paper calls for a circular economy in construction. Currently, less than 40% of construction and demolition waste is reused or recycled. Deconstruction carefully taking apart buildings to salvage materials creates more jobs, reduces landfill waste, and lowers the carbon footprint of new construction. HUD could incentivize this by showcasing local deconstruction ordinances (like those in San Antonio, Seattle, or Boulder) and by conducting material stock assessments of public housing.
Pillar Four: Building Capacity and the Evidence Base
A common refrain in the paper is that "one-size-fits-all" solutions fail. Housing markets in rural Mississippi, suburban Ohio, and coastal California are fundamentally different. Yet many local jurisdictions which control zoning, permitting, and land use lack the technical capacity, data, or political will to implement reforms. The federal government can step in here, not by mandating, but by incentivizing and capacity-building.
For example, cities often do not even have an inventory of publicly owned land that could be used for infill affordable housing. Federal support for data initiatives could help cities catalog and appraise these parcels, unlocking valuable resources for development. Similarly, the federal government should invest in expanding datasets like the American Housing Survey and the Census’ Survey of Construction, which are essential for understanding the housing supply gap but are chronically underfunded.
The paper also calls for rigorous evaluation of what works. Do land use reforms actually lower rents in a given market? Do energy retrofits pay for themselves in reduced utility bills? Does modular construction deliver on its promise of lower costs? These are not academic questions; they are urgent policy needs. The federal government should fund research that teases out the context-dependent impacts of zoning changes, building code updates, and subsidy programs.
Overcoming Headwinds: Workforce, Materials, and Politics
No discussion of closing the housing supply gap is complete without acknowledging the real-world obstacles. The authors point to a declining and under-skilled construction workforce. The skilled trades are aging, and few young people are entering the field. Volatility in global supply chains, the high environmental cost of materials like concrete and steel, and fragmentation in housing finance all conspire to slow production.
Technological innovation such as prefabrication, panelized construction, and digital construction management offers a path forward. But the U.S. building code system is a patchwork of local amendments that often prohibit new methods. The federal government could work with the International Code Council to develop a prioritized list of code amendments that prioritize affordability and performance-based requirements (rather than prescriptive rules). This would allow designers and builders to prove that innovations meet safety standards without jumping through endless regulatory hoops.
Moreover, the authors highlight the need for home repair programs to address the "split incentive" problem: landlords have little reason to invest in energy efficiency if tenants pay the utility bills. Federal policy should support on-bill financing, green mortgages, and other mechanisms that align the interests of owners and renters.
A Five-Year Window of Opportunity
The article concludes with a note of cautious optimism. Housing supply is a rare bipartisan issue; both presidential candidates in 2024 talked about it. But the authors warn that simply removing obstacles to production without a deliberate focus on equity and climate would be a grave mistake. Closing the housing supply gap in five years is technically possible, but only if the federal government adopts a holistic, intentional approach.
This means using all the tools in the toolbox: grants, low-cost loans, tax credits, mortgage insurance, technical assistance, and research funding. It means pairing deregulation with incentives for infill and affordability. It means treating existing homes as a strategic asset, not a relic. And it means building the capacity of local governments and community groups to implement solutions that fit their unique contexts.
Ultimately, the paper argues that the U.S. has never had a comprehensive framework to address the full continuum of housing needs. Creating one now one that marries affordability, climate sustainability, and resiliency is not just a housing strategy. It is a strategy for a more just, stable, and sustainable nation. The next five years will determine whether we rise to that challenge or continue to build our way into deeper crisis. The path forward is clear: build smart, preserve relentlessly, and never lose sight of the families who need a safe, affordable, and resilient place to call home.
Also Read: 14th Annual Demographia International Housing Affordability Survey: 2018