This was originally published by the Dorothy A. Johnson Center for Philanthropy as part of their “11 Trends in Philanthropy” 2024 report.
The widespread lack of affordable housing in the U.S. is neither a new nor an easy problem to solve. The need is great, and the solutions are complex. Despite decades of work from the public, private, and philanthropic sectors to improve the availability of and access to affordable housing, the challenge persists.
Nearly three-quarters of Americans (74%) cited the availability of affordable housing as a major problem in their community (NeighborWorks America, 2023). This brings large-scale trends to the community level. High interest rates, inflation, climate instability, and job market and population shifts — some the result of lingering effects of the COVID-19 pandemic — have had a dramatic impact on the affordability of housing as it is experienced at the local level. Combined with preexisting biases such as the generational impacts of redlining and use-based zoning codes, the long-term effects of policies like restrictive zoning, and a multitude of other challenges, a perfect storm of placed-based pressures has resulted in a crisis of significant magnitude.
In some of this country’s fastest-growing metro areas, local grantmakers are rallying to the cause of affordable housing, highlighting challenges in homeownership, rental markets, and racial disparities. Three case studies illustrate these efforts.
Homeownership in Denver
Homeownership can be an important asset-building tool, particularly as a forced savings mechanism. However, the racial wealth gap, combined with the availability of affordable inventory, has made it practically unattainable — contributing to intergenerational disparities (Brookings, 2020). COVID-19 made things worse by compounding existing exorbitant housing prices, particularly in cities that had experienced pre-pandemic population growth. One such city is Denver, Colorado.
Since 2005, the population of Denver has increased by 29%, putting significant pressure on housing demand (Byers, 2023). The insufficient number of new housing units resulted in a tight housing market and reduced affordability. During this period of population growth, the average home price in Denver increased 138% while the average hourly wage rate grew by only 37% (Byers, 2023).
To address the city’s housing emergency, The Denver Foundation deepened its participation in policy work in 2021. The foundation has subsequently continued to grow its presence in this space, including supporting Denver’s Expanding Housing Affordability Ordinance, which requires that, as new housing units are built, a specific number of units must be designated as affordable (2023). This not only recognizes the contribution zoning has made to the affordability crisis but the lever it can be to help drive local solutions.
The Cost of Rent in Austin
As of 2019 In the U.S., about 36% of households rented, rather than owned their homes (DeSilver, 2021). The number of households that spent more than 30% of their income on rent — designating them as “cost-burdened” — increased from 2008–2011 before leveling off for almost a decade. Unfortunately, in the aftermath of the pandemic, that number reached a record high in 2021, as rent prices outpaced the growth in wages (Whitney, 2023).
In cities with a steady stream of business and worker relocations, the demand for rental units has dramatically driven up the cost of rent. Austin, Texas is one example. With warm weather and a thriving tech economy, companies like Tesla and Apple have moved or expanded their businesses there. It’s therefore no surprise that in the decade from 2010–2020, metro Austin experienced a 33% increase in population, (Austin Chamber of Commerce, 2022), compared to national population growth of 7.4% (Makun et al., 2021). A growth rate of 23% is projected for metro Austin 2020–2030 (City Demographer, 2023).
“Nationwide, local foundations have been newly drawn to housing affordability, providing grants for rental assistance while also publicly advocating for eviction moratoria and supporting housing developers to bring more housing online more quickly.”
It’s also no surprise that Austin has experienced corresponding increases in housing costs and low housing inventory, especially in the rental market. There are only 23 affordable and available homes in metro Austin for every 100 renter households in a city where half of all residents are renters (Benjamin, 2022).
With the steady stream of business and worker relocations continuing, the Austin Community Foundation and other local funders are leading the call for more affordable housing. According to the Housing Affordability in Central Texas — Philanthropic Opportunities 2022 report commissioned by the community foundation, “the effectiveness of Austin’s response to its housing affordability crisis will determine its future” (Benjamin, p. 3).
This same report notes that Austin’s reality is mirrored everywhere. Nationwide, local foundations have been newly drawn to housing affordability, providing grants for rental assistance while also publicly advocating for eviction moratoria and supporting housing developers to bring more housing online more quickly (Benjamin, p. 5).
Racial Disparities in Grand Rapids
In addition to building intergenerational wealth, homeownership has many benefits, including the freedom to customize, control over expenses, household stability, and the ability to build a strong credit history. These benefits are not equally realized across the U.S. According to the Joint Center for Housing Studies, in every state, “Black, Hispanic, and Native American households have lower homeownership rates than white households” (Hermann, 2023), with the same true for Asian American households in every state except Hawaii. In Grand Rapids, Michigan, the community aims to collaboratively address these disparities.
Grand Rapids, in Kent County, experienced a population growth of 9.2% from 2010–2020 (U.S. Census, 2022), outpacing the state’s population growth of 2% during the same period (Butler, 2023). Like Austin and Denver, as the population grew, the increased housing demand resulted in homeownership and rental costs that outpaced wage growth, with Kent County ranked near the bottom nationally when comparing homeownership rates among different races. The gap is 23 points for Hispanic compared to white households, and a staggering 40 points for Black households compared to white households — 25% worse than the national average. Kent County has the fifth-worst housing disparity gap in the U.S. (American Community Survey, 2020), with over 50% of renters being cost-burdened.
Foundations, nonprofits, and community members came together to identify ways to address housing instability and racial disparities in homeownership, with local funders like the Frey Foundation having newly moved to fund housing issues. A new nonprofit, Housing Kent, grew out of this collaborative as a network organization of nearly 130 partners supported by nearly 20 funders — from corporate givers to family foundations, the local United Way, and the city’s community foundation (Housing Kent, 2023).
Conclusion
A lack of local safe and affordable housing is of particular interest to place-based funders because the issue has a widespread — and direct — impact on the quality of life in communities, including economic, educational, and overall well-being. For Denver, Austin, and Grand Rapids — as for countless communities nationwide — finding pathways for impact can be daunting. Yet despite the enormity of the issue — or perhaps because of it — localities don’t just reflect economic and societal shifts; they are exemplars for how to springboard solutions that may yet provide lessons that transcend place.
Explore the full 11 trends in Philanthropy for 2024 from the Dorothy A. Johnson Center here.
