Priced Out: The Growing Challenge of Housing Affordability
A recent Cobalt study found residents rated housing affordability in their communities at 41.36 out of 100. In many areas, housing costs continue to outpace wages even where jobs are available, and the challenge isn't just limited to buyers. For small-scale developers, the economics of building affordable housing are increasingly difficult to make work.
From a development perspective, affordability challenges are driven by the underlying cost of building housing. In many communities, constructing a basic four‑plex can exceed $1 million once land, utility connections, insurance, and fees are included. Higher property taxes and operating costs further raise the break‑even point, often requiring rents near $4,000 per unit to cover vacancies, maintenance, capital improvements, and modest cash flow. These economics make it difficult to deliver lower‑cost housing at scale.
Economic growth can increase housing demand, but markets do not always respond with enough affordable options. In the same study, consumers rated overall cost of living at 49 out of 100, underscoring that growth alone does not guarantee improved housing access. As prices rise faster than incomes, renters and first‑time buyers face growing barriers to stable housing, increasing financial strain and housing insecurity.
How Communities Can Act
Some communities are finding traction through practical, locally controlled changes, which is an approach championed by organizations like Strong Towns, which has helped communities nationwide rethink development at the neighborhood level.
That momentum is already taking shape. "We've worked hard to educate the city council on ways to improve affordability and improve infill development," said Cooper Frost, chair of the Strong Towns group in Charlotte, MI. "They listened, and we've just passed new zoning that opens the door for this approach to development. We're partnering with our community bank to educate local developers about the changes, and there is a lot of optimism and excitement."
References:
A recent Cobalt study found residents rated housing affordability in their communities at 41.36 out of 100. In many areas, housing costs continue to outpace wages even where jobs are available, and the challenge isn't just limited to buyers. For small-scale developers, the economics of building affordable housing are increasingly difficult to make work.
From a development perspective, affordability challenges are driven by the underlying cost of building housing. In many communities, constructing a basic four‑plex can exceed $1 million once land, utility connections, insurance, and fees are included. Higher property taxes and operating costs further raise the break‑even point, often requiring rents near $4,000 per unit to cover vacancies, maintenance, capital improvements, and modest cash flow. These economics make it difficult to deliver lower‑cost housing at scale.
Economic growth can increase housing demand, but markets do not always respond with enough affordable options. In the same study, consumers rated overall cost of living at 49 out of 100, underscoring that growth alone does not guarantee improved housing access. As prices rise faster than incomes, renters and first‑time buyers face growing barriers to stable housing, increasing financial strain and housing insecurity.
How Communities Can Act
Some communities are finding traction through practical, locally controlled changes, which is an approach championed by organizations like Strong Towns, which has helped communities nationwide rethink development at the neighborhood level.
- Update zoning to allow incremental housing. Legalizing duplexes, triplexes, and four‑plexes reduces per‑unit costs and allows development to occur at a neighborhood scale.
- Support small‑scale, incremental development. Encouraging smaller projects lowers financial risk and enables local developers to participate without requiring large capital investments.
- Restructure upfront city fees. Spreading permitting, infrastructure, and connection fees over multiple years (through tax billing or dedicated financing) reduces initial costs and helps projects pencil out.
- Align housing with jobs and services. Prioritizing infill locations near employment, transit, and amenities lowers household transportation costs and improves long‑term affordability.
- Invest in education and partnerships. Educating local officials, lenders, and developers on updated zoning and financing tools accelerates adoption and builds momentum.
That momentum is already taking shape. "We've worked hard to educate the city council on ways to improve affordability and improve infill development," said Cooper Frost, chair of the Strong Towns group in Charlotte, MI. "They listened, and we've just passed new zoning that opens the door for this approach to development. We're partnering with our community bank to educate local developers about the changes, and there is a lot of optimism and excitement."
References:
- https://www.strongtowns.org/journal/2026-2-26-three-ways-of-understanding-the-housing-crisis
- https://www.gao.gov/blog/affordable-housing-crisis-grows-while-efforts-increase-supply-fall-short
- https://nlihc.org/explore-issues/why-we-care/problem
- https://nlihc.org/gap
- https://endhomelessness.org/blog/opening-plenary-innovations-and-solutions-for-ending-unsheltered-homelessness-conference-march-2024/
- https://housingmatters.urban.org/articles-features/key-challenges-and-opportunities-housing-affordability-and-stability-2026
For more information on how Cobalt can help you adapt and thrive in the changing demographic, economic and social environment, visit the Cobalt website or reach out to us by email. Let us know if you need anything at all for benchmarking or research data; we are here for you.
Cobalt Community Research is a national 501c3 nonprofit, non-partisan coalition that helps local governments, schools and membership organizations measure, benchmark, and affordably engage communities through high-quality metrics, mobile geofencing data, surveys, and dynamic population segmentation. Cobalt combines big data with local insights to help organizations thrive as changes emerge in the economic, demographic and social landscape. Explore how we can help.
Cobalt Community Research is a national 501c3 nonprofit, non-partisan coalition that helps local governments, schools and membership organizations measure, benchmark, and affordably engage communities through high-quality metrics, mobile geofencing data, surveys, and dynamic population segmentation. Cobalt combines big data with local insights to help organizations thrive as changes emerge in the economic, demographic and social landscape. Explore how we can help.