As the nation contends with a housing affordability crisis, President Joe Biden and Congress should work together to create a deficit-neutral demonstration program to test ways to speed more affordable housing construction.

The crisis is real and urgent. Over the past 15 years, the nation has “underbuilt” housing by millions of homes. As a result of the mismatch between supply and demand, prices for both renting and purchasing have skyrocketed, making the limited number of available homes even less affordable for families who need them.

According to data from the Federal Reserve Bank of St. Louis, average rents increased 22 percent from the fourth quarter of 2019 to the fourth quarter of 2023, and home sale prices increased by 28 percent over the same period. More than 42 million households were cost burdened in 2022, paying more than 30 percent of their income for housing—accounting for nearly a third of all households in the country.

A 'For Sale' sign
A “For Sale” sign is posted in front of a single family home.

Joe Raedle/Getty Images

Equally concerning, the housing shortage directly impacts our nation’s economic competitiveness. The 2022 CHIPS and Science Act, designed to spur the domestic production of semiconductors, is expected to create hundreds of thousands of jobs in the coming years.

Without a way to quickly boost the supply of affordable homes, many communities seeing increased investment through the CHIPS Act will struggle to provide housing for all the workers coming to these new regional technology and innovation hubs.

To address these challenges, the federal government should establish a demonstration program that makes the swift production of affordable homes its priority. The program would promote responsible deregulation, the leveraging of private resources, and the siting of affordable homes in opportunity-rich neighborhoods.

The good news is the program wouldn’t involve additional spending: by redeploying a small percentage of unobligated COVID-19 relief funds (in other words, funds that have already been appropriated but have yet to be earmarked for a specific purpose), Congress could direct billions of dollars toward this effort. The Bipartisan Policy Center estimated that 10 percent of that pot could reap as much as $3 billion—a potentially transformative amount to advance innovative solutions to our national shortage of affordable homes.

Such a demonstration program would be launched in eight to 10 geographically diverse communities, selected through a multi-agency “notice of funding availability.” When choosing communities, agencies would prioritize those demonstrating a significant need for more affordable homes and anticipating both job and population growth from recent federal investments.

Communities that receive funding would commit to removing local regulatory barriers—such as exclusionary land use and zoning regulations, environmental impact reviews, and parking minimums—that can add to construction timelines and project costs.

In turn, the federal agencies involved would streamline federal regulations that impair the swift construction of affordable housing, while maintaining those needed to ensure safety, fair housing, and accountability.

We propose the demonstration program be subject to a rigorous evaluation that would assess the program’s impact on such issues as permitting approval and construction timelines as well as the number, affordability, and location of the homes created.

The outcomes will provide insights into how regulatory reforms and innovative, community-level approaches can increase the speed of housing production, boost the supply of affordable homes, and support the siting of these homes in areas close to job centers.

There is precedent for such a federal demonstration program to address critical housing needs. Enacted in 1992, the HOPE VI Urban Revitalization Demonstration Program enabled the Department of Housing and Urban Development to set aside legal and regulatory requirements to enable the public-private partnerships and innovation needed to address the crisis in public housing.

The current housing supply emergency requires a similarly quick and effective response, and the HOPE VI model demonstrates that a thoughtful deregulatory approach can achieve important results.

Henry Cisneros, a former secretary of housing and urban development, and Steve Stivers, a former House member from Ohio, serve on the advisory committee of the Bipartisan Policy Center’s J. Ronald Terwilliger Center for Housing Policy.

The views expressed in this article are the writers’ own.