Housing affordability impacts U.S. middle class amid focus on luxury homes

The housing crisis in the United States continues to challenge affordability, impacting even middle-class families across all states. Former Housing and Urban Development Secretary Adrianne Todman highlighted this issue at the Inman Connect Conference in New York City, noting that builders are increasingly focused on luxury homes rather than starter homes.

"Today, one of the biggest deficits that we have is the creation of new starter homes," Todman stated. She further explained that there are "no strong financing tools right now," leading builders to prioritize luxury constructions as they are more financially viable.

Todman served as HUD acting secretary starting March 2024 and was previously deputy secretary since June 2021. According to the National Low Income Housing Coalition, there is a national shortage of over 7 million affordable homes, with an additional 6.8 million units needed for extremely low-income families.

“Market is always going to do what market does, and every now and then there does need to be an intervention,” Todman remarked.

Addressing historical perspectives on housing, Todman noted that discussions around affordable housing have evolved significantly over the past 15 years. “There was a moment in time when nobody talked about affordable housing, and when we did talk about affordable housing, it was public housing. Housing for ‘someone else,’” she said.

The issue extends beyond major cities like New York or Los Angeles. "It's happening in Boise. It's happening in Salina, KS," Todman added.

Realtor.com analysis indicates Hawaii, Montana, and New York as the least affordable states relative to local incomes.

Todman also discussed the Build Back Better Act's provisions aimed at addressing affordable housing nationwide. The $1.75 trillion bill passed by House Democrats in November 2021 included $150 billion earmarked for HUD programs but stalled in the Senate due to opposition from key figures like Democrat Sen. Joe Manchin.

“We were preparing not just to receive but to push,” Todman explained regarding efforts to incentivize local leaders through funding provided by the bill before its failure.

Reflecting on her public service career as she returns to civilian life, Todman emphasized the ongoing need for strategies encouraging builders to target lower income levels with their projects. “We’ve got to do something to incentivize builders to build to the income levels we’re talking about.”

She concluded by expressing confidence in American resilience: “We have the systems that have been built to sustain the winds of any generation.”