Solutions to the American Housing Dilemma: 2 Bold Actions to Take Now

Last month, I wrote about the 5 Key Challenges Holding Back New Development. In this post, I’m focusing on solutions to the American housing dilemma—two bold actions that policymakers, developers, and communities can consider right now. Inspired by Winston Churchill’s advice to ‘never let a good crisis go to waste’, these are not full policy recommendations, but fresh approaches that challenge outdated methods. The housing crisis in the U.S. will not disappear on its own; we need fresh solutions. 

Image from Unsplash.com courtesy of Getty Images.

Rethink the Reliance on the 30-Year Mortgage

The 30-year mortgage was authorized by Congress in 1948 for new construction loans and in 1954 for existing home loan purchases. It has become the primary tool for home purchase, with over 85% of purchases financed with a 30-year term. But it’s increasingly proving to be the wrong tool for today’s market, as buyers struggle to afford the payments required to satisfy interest and principal repayments. 

Mortgage Alternatives: A Key Solution to the American Housing Dilemma

A promising option is the 40-year mortgage. These are already being used for first-time homebuyers and those looking to avoid loan defaults. To reduce the burden of long-term interest, lenders could offer interest rate adjustments every five years. 

City governments or their partners could also help by subsidizing the interest rate or providing additional downpayment assistance. This would encourage home ownership, boost new development, and ultimately increase property tax revenue. 

Cities might even explore tax increment financing districts to capture funds for these initiatives The bigger question is: “How might we reimagine the home loan process to put buyers first and increase demand for new construction’.  

Image from Unsplash.com courtesy of Jed Owen.

Make Modular Housing Exciting

Many communities are embracing concepts like Accessory Dwelling Units (ADUs) and Tiny Homes as affordable solutions, but implementation has stalled in many cases. Modular housing could be a significant part of the solution, especially where ADUs are already permitted. 

How Modular Housing Works as a Solution to the American Housing Dilemma

Modular construction fabricates entire building components, or "modules," off-site in a controlled factory environment. These completed modules are then transported to the construction site and assembled into residential buildings that are structurally and aesthetically indistinguishable from traditional construction.

Key Benefits of Modular Housing Affordability

Speed: Project timelines can be cut by 30–50% since site prep and module fabrication happen simultaneously.

Cost savings: Construction costs may drop 20% or more, thanks to efficiency, bulk purchasing, and reduced waste.

Sustainability: Modular homes can integrate high-performance insulation, energy-efficient windows, solar panels, and sustainable materials.

Flexibility: They can be customized for dorms, single-family homes, or multi-family developments in both urban and rural areas.

Challenges Modular Housing Must Overcome in the U.S. Housing Market

Despite the benefits, several challenges remain:

• High initial capital requirements for factory setup and production.

• Fragmented building codes—only 39 states have statewide modular programs.

• Transportation hurdles for bulky modules.

• Persistent stigma linking modular homes with outdated mobile homes.

Still, the opportunity is enormous. As manufacturing investment surges, now is the moment to link modular housing with job creation and affordable housing solutions. States and regions should work together to streamline codes and promote better information about the benefits.

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The American housing dilemma cannot be solved by doing more of the same. Exploring mortgage alternatives and embracing modular housing are two actionable steps that can help create more affordable, sustainable communities.

For more in-depth insights, we encourage you to explore this publication from the Urban Institute and this research document for additional guidance.

If you’d like to discuss these housing crisis solutions in greater detail—or learn how they might be applied in your community—contact us today. Together, we can turn innovative ideas into meaningful action.