America’s affordable housing crisis is showing few signs of abating.
Last month, Realtor.com gave seven states failing grades in its housing affordability report cards, and only 13 states received a B-minus mark or better. Earlier this week, Zillow reported that apartment rent prices have outpaced median household income growth by 6.2% nationwide since April 2020. And a Zonda report released May 7 found that typical monthly mortgage payments in the U.S. are 82% more expensive than two-bedroom rental costs.
On Wednesday, The Pew Charitable Trusts released a five-point proposal to address the affordability crisis. Ranging from urban planning initiatives to low-cost home financing reform, the nonprofit advocacy organization maintained that these policies can “open new homeownership opportunities and reduce financial risks for homebuyers.”
Mortgages for manufactured homes
Also known as mobile homes, prefabricated manufactured homes have long been associated with low-income housing. But Pew noted that states generally characterize these dwelling units as personal property instead of real estate, meaning low-income buyers can’t access a traditional mortgage and often seek riskier financing options.
“States could modernize laws that now limit access to traditional mortgages for not only new homebuyers, but also those who bought a manufactured home using other financing that comes with higher costs and fewer protections than mortgages,” Pew suggested.
Contract-to-deed reform
A 2023 Pew analysis found that only 26% of homes that sell for less than $150,000 are financed using a mortgage. Instead, buyers often resort to alternative financing such as contract-to-deed arrangements, also known as land contracts.
In a contract for deed, the seller provides financing to the purchaser and keeps the legal title of the home until the borrower makes all the payments on the loan. These contracts lack the level of consumer protections that mortgages carry and have been notoriously ripe for fraud and abuse. For example, the Consumer Financial Protection Bureau (CFPB) has noted that properties purchased through this arrangement often lack inspections or appraisals, resulting in inflating prices, and sellers may attempt to evict the buyer after one missed payment.
Pew noted that Kansas and Minnesota have passed legislation to strengthen protections for homebuyers who enter into a contract for deed, and the group urged other states to follow suit.
In 2024, the CFPB issued an advisory opinion maintaining that contracts for deed should be covered under Regulation Z of the Truth in Lending Act, a federal law that requires disclosure of the terms and conditions of finance charges in credit transactions. However, that advisory opinion was among the 67 rules, policies and other guidelines that the CFPB rescinded on May 9 as part of a broad policy overall by Russell Vought, the agency’s acting director.
ADUs
Accessory dwelling units (ADUs) — known colloquially as in-law suites — involve the construction of small living spaces in backyards or the conversion of garages or basements into apartments. These units tend to have lower rents than traditional apartments or single-family rentals, and Pew advocated that broader availability of ADUs could drive down housing costs for low-income individuals.
A 2023 Pew poll found that 72% of respondents nationwide were in favor of allowing ADUs in backyards or above garages. However, just 14 states have laws on the books allowing ADUs, according to Pew, while local regulations vary.
Office-to-residential conversions
Office vacancy rates reached 20.9% at the end of 2024, according to Cushman & Wakefield. While converting offices to residential units has historically been an expensive process, Pew and architectural design firm Gensler proposed that converting offices to dormitory-style microapartments with shared co-living spaces would shave construction costs by 25% to 35% per square foot.
Pew and Gensler attributed the cost savings largely to reduced plumbing costs by concentrating kitchen, restroom and shower areas in shared spaces on each apartment floor. Using Seattle and Minneapolis as examples, they claimed that the subsidies currently required to build one studio apartment could be stretched to cover construction costs for four converted microapartments.
Single-stair buildings
A Pew study released in February found that four- to six-story apartments or condominiums with a single staircase are 6% to 13% less expensive to build than those with two stairways. With less stair space, these narrower buildings can fit into smaller lots in crowded urban areas.
The argument against single-stair construction is that it poses a safety risk in the event of a fire that requires evacuation. But a review by Pew and the Center for Building in North America found that modern improvements in ventilation, sprinkler systems, fireproof stairs and self-closing doors mitigate fire risks.
