How Washington could actually make housing more affordable

New York (CNN)For all the national focus on the increasing cost of healthcare, gas, and Amazon prime memberships, by far the largest share of Americans' paychecks goes toward housing.

Though housing costs have eased slightly over the past year, they dramatically outpaced inflation over the past decade.
Buyers and renters don't have much choice than to pay more: Low-end apartment vacancy rates are as low as they've been since 2001, as developers have piled into the higher-margin luxury market. That creates a drag on economic growth, since job-seekers can't afford to live close enough to where they could find the best work.
About a quarter of average household income in 2016 was used to pay rent or a mortgage, according to the Bureau of Labor Statistics. Housing prices have risen 38% more than inflation since the end of the last recession in 2009.
    Meanwhile, federal housing subsidy programs have stagnated, and the federal agencies that back up most of the American mortgage market have been in conservatorship ever since the financial crisis left them insolvent in 2008.
    In the face of Congressional inaction, developers, affordable housing groups and the tech industry are backing a public relations and lobbying campaign to try to drag housing issues onto the national stage.
    "This is something that now feels very much like a crisis moment," says Ali Solis, the president of Make Room, a two-year-old group that advocates for renters. "The bottom line is, there needs to be a full commitment from the president down to the city council level to come together and made housing a national priority."
    What can the federal government do?

    1) Massively increase funding for federal housing subsidies.

    The federal budget hasn't kept up with the needs of low-income residents for a long time.
    Between 1987 and 2015, the number of low-income renters increased by 6 million, but only 950,000 more people have received federal rental assistance. The Department of Housing and Urban Development hasn't invested in new public housing developments in decades. And last year's corporate tax cuts also weakened the biggest new source of affordably-priced units, the Low Income Housing Tax Credit Program, by deflating the value of the credits.
    To fix that problem, a bill in Congress with broad, bipartisan support would boost the LIHTC program by 50%, which would cost about $4.1 billion and create another 400,000 units of affordable housing over 10 years.
    Another approach, popularized by Pulitzer Prize-winning sociologist Matthew Desmond, would guarantee housing vouchers to all Americans making less than 30% of the local median income, allowing them to pay no more than 30% of their own income on rent. Desmond estimates that would cost a maximum of $22.5 billion per year, without counting the economic and social benefits of helping people avoid homelessness.
    A more modest plan, advanced by the Center on Budget and Policy Priorities, would create a "renters tax credit" to help cushion the impact of rising rents. That would cost $6 billion per year.

    2) Discourage local over-regulation.

    Scarce rental subsidies would go further if housing were more plentiful in the first place.
    The housing crunch has been caused in part by a shortfall in construction after the recession, which dried up the supply of credit. Now that lending and investment is back, the gradual accumulation of local regulation in hot markets like San Francisco — such as minimum lot sizes, parking requirements, and extensive approval processes with opportunities for neighbors to oppose new projects — reduce the number of units that can be built even in cities that otherwise have the infrastructure to support them.
    The National Multifamily Housing Council estimates that regulation on all levels of government compose 32% of the cost of new multiifamily developments. But don't take the industry's word for it.
    "Now there's a consensus among industry participants and advocates that the local regulatory environment is part of the problem," says Stockton Williams, president of the National Association of State Housing Agencies.
    The federal government could award competitive grants to cities that relax their codes — what California Rep. Ro Khanna has called a "race to the top" for housing policy — or condition transit investments on allowing maximum density around rail and bus stations.
    This isn't a new idea. In 1991, HUD put out a report on the costs imposed by excessive regulations. President George W. Bush tried again in 2001 to tackle the problem, with an outreach campaign incentives for local governments and an online clearinghouse for information about regulatory barriers and how to overcome them.
    They didn't solve the problem. A new effort would have to be a lot bigger in order to succeed.

    3) Decrease the cost of construction.

    Another reason developers aren't building as much: Land, labor, and materials are all getting harder to find and more expensive.
      The price of land is hard to control. But the White House could make two major construction materials, lumber and steel, cheaper immediately by lifting tariffs it imposed on both of those products.
      Developers say finding skilled workers is difficult, since so many left the industry after the housing market crashed in 2008. Beefed-up training programs and better provisions for income security would bring more people into the profession, as would easing a crackdown on immigrants that has forced many current workers to leave their jobs.