Navigating the Housing Crisis and Climate Change
By Denise Scott and Anasa Laude, LEED AP BD+C
The housing crisis is spiraling out of control, impacting households nationwide. As rental and homeownership costs rise faster than the pace of earnings, the average low- and moderate- income renter is finding it increasingly challenging to keep a roof over their head, while low- income homeowners are facing higher rates of foreclosure.
Climate change is intensifying extreme weather events and making certain areas more vulnerable to natural disasters – exacerbating the housing crisis.
The already staggering rates of homeless in cities across the country are being pushed to new heights, as more people struggle to cope with both escalating housing costs and climate-related displacement.
How Climate Change Exacerbates the Housing Crisis
A growing number of Americans are living in deteriorating housing due to owners’ inability or unwillingness to invest in increasingly costly repairs. Cost-burdened homeowners and low-income renters are most likely to live in homes in disrepair which heightens their vulnerability to the increasing frequency and severity of hurricanes, floods, wildfires and heat waves.
Complicating the issue, is that many more homes are under threat with 41% of rental housing in the US exposed to substantial weather- and climate- related risks.
In 2023 there were a staggering 66 disaster declarations across the country, the most in a single year. As a result of these disasters, 3 million Americans were driven from their homes, with approximately a third, becoming climate migrants or displaced for 6 months or longer.
Property insurance rates have drastically increased due to climate change and other factors. In regions most prone to frequent floods and wildfires insurers are refusing to insure homes altogether. This impacts the entire real estate market but is especially detrimental to efforts to keep low- and moderate-income earners housed affordably and safely.
A Deeper Look at the Housing Crisis
The housing crisis is complex, with three key issues driving the shortage of affordable housing.
For low wage workers the housing crisis is quite dire. There is no state or city in the country where a full-time minimum wage worker working 40 hours per week can afford a two bedroom apartment.
To further illustrate this point, the median asking monthly rent for new multifamily units in the third quarter of 2023 was $1,833 while an extremely low income household of four can only afford a monthly rent of $780. Just 2% of new units had asking rents under $850 during this period. At the same time only one in four renters who qualify for housing assistance receives it and subsidies for affordable housing construction and preservation are oversubscribed.
The Rising Costs of Building and Maintaining Affordable Housing
Investors Have Reshaped the Housing Landscape
Exclusionary Zoning Restricts Development of New Affordable Housing Units
The Rising Costs of Building and Maintaining Affordable Housing
The cost of building and maintaining housing has skyrocketed, putting many existing multifamily housing sites at risk. Costs have increased across most inputs of building and operating housing including building supplies, utilities and insurance.
For community based affordable housing developers across the country rising costs are putting millions of units of affordable housing at risk. Researchers recently reported a 5.6% annual growth rate for repairs since 2010.
When costs are so high, rent must be set at levels the generate cash flow for utilities, insurance, staffing, loan repayment and other essential expenses. Expanding subsidies for renters would ensure cashflow for building upkeep and reserves for rainy days. Otherwise it does not work.
Developers who are committed and have been long invested in providing housing for very low income households are really challenged to keep building operations afloat. They are asking themselves how long can they maintain their low-income housing portfolio on shoestring budgets.
There are policy proposals and initiatives to get more capital to CBOs but will it be enough to shore up affordable housing sites currently at risk of imploding? Will it be enough to build enough units of housing for our nation’s cost burdened and homeless families and will the resources come in time?
Investors Have Reshaped the Housing Landscape
Although we have seen numerous new multifamily developments being constructed in cities around the country, very few are affordable to low- and moderate- income households.
The real estate industry has become increasingly investment- driven with developers prioritizing luxury apartments for higher income households to maximize returns.
Investors have hollowed out both multi and single families housing from the market bundling hundreds of properties into shadowy LLCs – a legal structure that enables landlords to evade housing policies – further limiting affordability options.
Exclusionary Zoning Restricts Development of New Affordable Housing Units
For decades, efforts to build new housing in low-density areas have been thwarted by exclusionary zoning practices—local land use policies that prohibit the construction of multifamily buildings.
Local elected officials are often pressured by their constituents to block the building of affordable housing through local legislation. This practice has resulted in communities that are segregated by class as well as race.
The good news is that legislators at the federal level have introduced the Yes In My Back Yard (YIMBY) Act, which aims to counter the Not In My Back Yard (NIMBY) movement that opposes multifamily and affordable housing developments in favor of single-family communities.
The YIMBY Act seeks to incentivize states and local governments to address exclusionary zoning practices. This initiative promotes the adoption of land use policies that support multi-unit housing options, such as duplexes, triplexes, and accessory dwelling units, thereby expanding housing availability across diverse neighborhoods and income levels.
For decades the community development sector has worked to expand and preserve affordable housing which is already quite challenging and complex. Climate change and concomitant social, economic, and political issues have made matters worse with four key issues to navigate in the coming years:
- Expanding access to sustainable, climate resilient housing
- Enhancing community resiliency in low-resourced communities
- Coordinating effective strategies to manage climate-induced displacement, and
- Preparing communities for job and small businesses opportunities relevant to climate adaptation and mitigation efforts.
Expanding access to sustainable, climate resilient housing
The affordable housing sector has a critical role in mitigating climate change by reducing carbon emissions. As we work to expand housing units and enhance the safety and resilience of new and existing homes, it is crucial that we also minimize emissions during construction and maintenance. Homes that have not been upgraded to meet even basic building code standards – for instance using old oil burners, lead pipes and asbestos – pose health risks for everyone in the household and also contribute to water, air pollution and toxic emissions, affecting the surrounding community.
To effectively tackle climate change, the affordable housing sector must actively work towards upgrading properties nationwide for climate change mitigation and adaptation.
The Inflation Reduction Act (IRA) allocated billions of dollars to fund tax incentives and low-cost financing for green infrastructure projects and the electrification of homes, commercial buildings and transportation.
As outlined in our previous post, funds will be channeled through public agencies, CDFIs, green banks and national nonprofits to financing the green transition across the country. The IRA also provides tax incentives to offset the cost of electrifying buildings, homes and transportation.
Standards and certifications such as LEED, WELL, Enterprise Green Communities and EPA’s EnergyStar, WaterSense programs provide frameworks and benchmarks for designing, constructing, and operating buildings that meet rigorous environmental and health standards.
Many communities have already realized the importance of integrating renewable energy into housing and commercial projects to ensure holistic approaches to community development. These are models that must be expanded more broadly with public and private investments.
Green Building Case Studies
Net Zero PHIUS Multifamily Affordable Housing
Multifamily Green RAD Redevelopment
New Construction Green Affordable Housing on Former Brownfield
Net Zero PHIUS Multifamily Affordable Housing
425 Grand Concourse in Bronx, NY is an award-winning Passive House certified development providing 277 units of affordable housing, an educational facility for a local community college and a much-needed medical center in an area with NYC’s highest rates of childhood asthma due to air pollution.
Developed by MBD Community Housing Corp and Trinity Financial and designed by Dattner Architects the 26-story building consumes 70% less energy than conventional housing of its size, reducing carbon emissions in an area plagued with one of the highest levels childhood asthma rates in the United States.
Multifamily Green RAD Redevelopment
Located in Boston, MA the Eva White Apartments, a 102-unit , two-building site (440 and 450 Tremont) was rehabbed with deep energy retrofits in 2023 by Castle Square Tenant Organization as part of a Rental Assistance Demonstration conversion. The site is projected to achieve an estimated 49% and 67% at each building. Learn more.
New Construction Green Affordable Housing on Former Brownfield
The Rose, Minneapolis The Rose is a 145,000-square-foot mixed-income redevelopment of Minneapolis’s South Quarter. Stormwater management was a key strategy to remediate water pollution and contamination. The development features 33 percent green space and is designed with rain gardens that infiltrate and reuse about 90 percent of rainwater for community gardens. Learn more here.
Enhancing Community Resiliency: Accessing Untapped Green Infrastructure Dollars
Some community development practitioners have realized that focusing solely on sustainable housing is insufficient for climate resilience and have been integrating neighborhood resilience through green infrastructure and renewable energy access – not just within their housing portfolio but across their target communities and catchment areas.
Green infrastructure and ecosystem services are vital for climate change mitigation, aiding in stormwater management, mitigating severe flooding, and reducing the urban heat island effect.
In addition to funding solar and net zero building projects, federal funding supports best practices in green infrastructure. These resources are under utilized in the community development sector. Funding can support the integration of permeable pavers, green parking lots and greenways in and around affordable housing and economic development sites, and small parks in courtyards alleyways. CBOs can use their collective voices to call for the greening of paved spaces in and around their communities.
Remediating local Brownfields can drastically reduce community exposure to pollutants while creating sustainable housing and/or parks and mini forests for improved air and water quality.
When researchers recently ranked the most resilient counties in the nation, they found that those offering tax credit incentives for renewable energy, as well as those with robust social infrastructure—such as community programs, parks, and libraries that serve as lifelines for distressed residents in emergencies—tended to score higher. Additionally, geographical factors like proximity to coastal or low-lying areas versus elevated and mountainous regions also contribute to a county’s resilience. Low-lying and coastal have the highest risk of flooding. How often of late have we seen streets suddenly transform into raging rivers?
Understanding these factors helps communities and policymakers prioritize strategies that enhance resilience and protect residents during emergencies.
By integrating solutions tailored to the specific geographic and climatic challenges of a region, communities can mitigate the impacts of climate change on housing and infrastructure.
Climate resiliency planning, management, and implementation are significant undertakings. Many community-based housing and community development organizations are already stretched thin, with limited capacity while serving an increasing number of people with evolving needs. However, given the strong likelihood of future climate-related crises, this sector will require public, private, and philanthropic support in building capacity to drive and manage resiliency efforts in their regions.
Managing Climate-Induced Migration
Coordinating effective strategies to manage climate-induced migration in the midst of this housing crisis is a growing concern requiring more program, policy and investment interventions.
While technological advances in green infrastructure can significantly enhance resilience in many communities, in some regions, these measures may fall short. As climate migration adds pressure to already strained housing markets, it is crucial to address this growing challenge alongside the housing crisis.
For instance over the past 20 years we have had the devastation of Hurricane Katrina in Louisiana, Hurricane Maria in Puerto Rico, Hurricane Sandy in the Northeast, and out-of-control wildfires in California and Hawaii. Scientists predict many more disasters of this kind in the coming years, and as a result, climate-induced migration is expected to drastically increase.
There are areas of the nation where resiliency measures will not be enough and permanent displacement is inevitable. NOAA forecasts that by 2050 over $106 billion worth of property in the US will be below sea level.
Low-income communities at the intersection of the housing crisis and the climate crisis are most vulnerable to homelessness in the aftermath of natural disasters.
Climate migration often occurs within a context of multiple compounding and interrelated environmental crises. This means that the host communities often face their own housing challenges and can be victims of natural disasters themselves. Low-resourced host communities often lack capacity for planning and coordination efforts, leaving climate migrants unsupported in their rehousing efforts and resulting in delays in accessing supportive services.
Cross-sector collaboration will be key to ensuring that those left homeless and displaced due to climate change are well supported. This includes funding community-based organizations (CBOs) and local public agencies in receiving cities to strengthen staffing and facilities that provide a one-stop shop for access to health services, housing, education, and job placement. These investments must be made sooner rather than later to ensure resources are not stretched thin and that the quality of life for existing residents is not diminished by the influx of displaced families.
To ensure local economic opportunities for host communities, regional officials must foster business opportunities for local small businesses through contracts supplying the host cities with food, shelter, and transportation.
Participatory planning is key in ensuring communities have a voice and stake in planning and coordination efforts to support new climate migrants.
Substantial resources – public, private and philanthropic – will be required to repurpose underutilized land for new sustainable housing and improving local resiliency with infrastructure investments to ensure that existing residents and climate migrants are adequately housed.
Preparedness will also be a challenge since climate change is unpredictable. However, resilience measures will strengthen communities, making them more likely to withstand and recover from its impacts.
Preparing communities for job and small businesses opportunities relevant to climate adaptation and mitigation efforts
The IRA has committed billions of dollars in investment over the next several years to expand clean energy, and invest in housing, transportation and infrastructure upgrades. This is an opportunity for economic development in distressed and vulnerable communities that will create an estimated 1.5 million new jobs.
Funding will also be used to expand opportunities for clean energy entrepreneurship while prioritizing over 50% of its investments in disadvantaged communities.
However, to fully leverage the economic potential of these investments, communities must be proactive in preparing their local residents and businesses for the opportunities ahead. This includes ramping up training programs to equip individuals with the skills needed for the new jobs being created in areas in electrifying our nation’s housing stock and transportation system.
The workforce development sector has a major role to play here, to help ready workforces for our nation’s green transition. There must be more direct engagement between the workforce development and housing sector to facilitate these efforts.
In addition, small businesses and contractors in disadvantaged communities will need support to navigate the contracting process and compete for the projects funded by the IRA.
Looking Ahead
Addressing the intertwined crises of housing affordability and climate change requires comprehensive and proactive solutions. This involves not only expanding access to sustainable, climate-resilient housing but also bolstering community infrastructure and fostering local economic opportunities to ensure all residents, including those displaced by climate-induced events, are adequately supported.
Denise Scott, Founder of Bell and Notice Advisors, is a nationally recognized leader in community development finance. Over the course of her nearly 40 year career she oversaw the implementation of billions of dollars of investments in cities and rural communities nationwide.
Anasa Laude, LEED AP BD+C, Managing Director of ILE Strategies, empowers nonprofit and public sector leaders with fund development and strategic planning solutions to achieve climate resiliency and economic impact.
