Housing affordability has shifted from a persistent socioeconomic condition to an overt political crisis. Yet the proposed remedies have changed little. They recur in cycles, often presented as innovations, though most are refinements of long-standing approaches.
One category treats affordability as a technical problem. Build more cheaply. Prefabricate. Standardize. Reduce construction costs through industrial means, including manufactured and mobile housing. Another focuses on regulation: eliminate zoning barriers, streamline approvals, or remove what are often described as “gold-plated” development standards. A third relies on subsidy—direct assistance, tax credits, or mortgage manipulation—to bridge the gap between incomes and housing prices. A fourth emphasizes locational efficiency: reduce household transportation costs by placing housing where daily life does not require automobile ownership, freeing income for rent or mortgage payments and improving borrowers’ creditworthiness.
There is also an organic mechanism that is rarely discussed and seldom endorsed: housing becomes affordable as it deteriorates. As buildings age and lose market appeal, their value declines. This process has historically housed millions. It is not a policy to be recommended, but it is a reality that underlies much of the existing affordable housing stock.
Each of these approaches has merits and limitations. Yet they obscure a set of older, structurally distinct solutions—solutions that once produced stable, mixed-income societies at scale and deserve renewed examination.
- Housing That Generates Income
For most of history, housing was not a single-use consumer good. It was an income-producing asset. Many traditional building types embedded rent-generating capacity within ordinary dwellings, allowing owners of modest means to subsidize their housing costs.
In Milwaukee and other Midwestern cities, the so-called “Polish basement” was a partially sunken, legally marginal apartment beneath a single-family house. These units housed relatives, boarders, or tenants and helped immigrant families stabilize financially. They were not boarding houses in the institutional sense but rather informal, flexible living arrangements.
In Boston, the triple-decker became one of the most effective forms of affordable housing in American history. Built on narrow lots, these three-story buildings typically housed the owner’s family in one unit while renting the other two. They combined density, walkability, and income generation without separating ownership from occupancy.
Across much of the United States and Europe, small rear outbuildings—variously called dependencies, carriage houses, or service cottages—were common until the early 20th century. In places like Williamsburg, Virginia, these structures housed extended family, workers, or renters. Their disappearance was not due to functional failure but to zoning prohibitions that outlawed incremental density.
These types worked because they aligned incentives. Owners maintained their properties because they lived in them. Rent offset costs without requiring speculative scale. Risk was distributed across thousands of small landlords rather than concentrated in large institutions.
- Institutional Investment in Housing: The European Model
Another largely forgotten mechanism is the use of institutional savings, particularly labor and retirement funds, to finance housing directly.
In interwar Europe, several countries required or encouraged union pension funds to invest in socially productive assets, including rental housing and medical facilities. This was not charity. It was a long-term, stable investment aligned with long-term liabilities. Housing provided predictable returns and social stability.
The contrast with contemporary practice is stark. Today, enormous pools of public and quasi-public capital—teachers’ retirement funds and postal worker pensions—are routinely invested in hedge funds, private equity, or global real estate speculation. Redirecting even a portion of this capital toward domestic rental housing would have transformative effects.
The scale is already in place. What is missing is the institutional framework and political will.
- Small-Scale Development at Metropolitan Scale: Paris in the 19th Century
Perhaps the most instructive precedent is the rebuilding of Paris in the mid-19th century under Napoleon III and Baron Haussmann.
Following the revolutions of 1848, European governments faced a destabilized urban working class and a housing crisis. In France, Louis-Philippe was replaced by Napoleon III, who quickly addressed both political unrest and urban decay.
The state acquired large tracts of slum property, installed modern infrastructure—sewers, drainage, and streets—and then subdivided the land into small development parcels, often around 100 feet wide. These parcels were not sold to large developers but to thousands of small owner-builders.
Standardized, pre-approved building designs were provided. Buildings typically rose five to six stories, with ground-floor shops, offices, or workshops, and apartments above. Many included rear buildings with smaller, less expensive units. Height was regulated proportionally, commonly limited to one and a half times the width of the street.
Each building contained between 12 and 24 apartments—carefully calibrated so that rental income would house the owner’s family and generate approximately a 10 percent return. If the project failed, ownership reverted to the state.
Crucially, access to development was not limited to existing wealth. Loans were issued based on character, education, and competence—criteria more like a job interview than a bank underwriting process.
This system created the Parisian middle class. It also produced the mixed-use, café-lined streets that still define the city. Density was not imposed by towers but achieved through repetition of small increments.
- Reducing the Development Hurdle
Historically, development did not require navigating a labyrinth of approvals. In much of Europe, architects were responsible not only for design but also for code compliance and inspections. There were no building departments as we know them today.
The state retained the right to inspect and halt work if construction deviated from approved norms, but the burden of proof lay with the architect, not the applicant. This system persists today in parts of Europe and in limited form in some American jurisdictions.
The effect was profound. Architects applied their fees to construction oversight rather than to permit drawings. Development became accessible to individuals of modest means. The barrier was competence, not bureaucracy.
Contemporary experiments echo this logic. “Pink zones,” expedited or low-regulation districts, are intended to reduce red tape and allow less experienced developers to participate. Their effectiveness depends on scale, oversight, and consistency, but the principle is sound.
- Alternative Ownership and Construction Models
Other mechanisms address affordability by separating land, labor, and capital in novel ways.
Manufactured housing offers lower costs by excluding land from the mortgage and renting it instead. Although stigmatized, this model reduces the financial barrier and has historically provided stable housing for millions.
Self-build models, common in parts of Latin America and Europe, place a licensed contractor (or government technician) on site to obtain permits and supervise construction while residents build their own homes. Participants gain housing and vocational skills simultaneously.
These approaches recognize that labor and knowledge are assets, not obstacles.
- Codes and the Question of Risk
Modern building codes improve in three-year cycles, becoming more complex and restrictive, yet most Americans live in homes built decades ago under older, less demanding standards. The median age of owner-occupied housing in the United States is about 40 years. Roughly half of the housing stock was built before 1980, and a majority of homes sold in recent years are 30 years or older.
Many jurisdictions have long recognized that applying current codes to older buildings can make rehabilitation prohibitively expensive or impractical. In New Jersey, for example, the state adopted a Rehabilitation Subcode precisely to rationalize how alterations and repairs are treated, because applying the full new-construction code to existing buildings did not reflect their realities and added unnecessary cost to rehab projects that are essential for housing supply and affordability.
The contradiction is obvious. If it is acceptable and common for Americans to live in older houses built before complex codes existed, and if older housing persists without widespread catastrophe, what is the credible argument for prohibiting the building, rebuilding, or rehabilitation of similar structures under proportionate standards? Codes were created to reduce risk, but they have also eliminated proven building types and construction methods that once produced affordable, durable housing at scale. The question is not whether codes are necessary, but whether they are proportionate, historically informed, and fit for the incremental repair and reuse that comprise the majority of the nation’s housing stock.
Conclusion
The affordable housing crisis is not the result of a lack of ideas. It is the result of forgetting which ideas worked.
Small-scale income-producing buildings. Institutional investment in rental housing. Incremental development is enabled by standardized design and minimal bureaucracy. These were not marginal experiments. They built cities. They produced the middle class. They stabilized societies.
The challenge today is not to invent a new solution, but to recover the structural logic of old ones—and adapt them to contemporary conditions.