Housing Affordability Hits ‘Even the Middle Class’ as Fewer Starter Homes Are Built, ex-HUD Secretary Says

The housing crisis in the U.S. shows no sign of easing as affordability hits even the middle class—across all U.S. states—and builders “focus on luxury instead of starter homes.”

“Today, one of the biggest deficits that we have is the creation of new starter homes,” former Housing and Urban Development Secretary Adrianne Todman candidly told an audience at the Inman Connect Conference in New York City.

There are “no strong financing tools right now,” she added, and many builders are building luxury because that is “what pencils out.”

Todman was named HUD acting secretary in March 2024. Previously, she served as the agency’s deputy secretary since her confirmation in June 2021.

Nationally, there is a shortage of more than 7 million affordable homes, according to the National Low Income Housing Coalition. The advocacy group says at least 6.8 million more affordable housing units are needed for extremely low-income families.

“Market is always going to do what market does, and every now and then there does need to be an intervention,” said Todman.

Housing help

“There was a moment in time when nobody talked about affordable housing, and when we did talk about affordable housing, it was public housing. Housing for ‘someone else,'” said Todman.

Over the past 15 years, she added, she’s seen how the middle class and the working class are also experiencing affordability issues.

“It’s not just happening in New York, L.A., Miami. It’s happening in Boise. It’s happening in Salina, KS. It’s happening in places where we never knew,” said Todman.

For perspective, a Realtor.com® analysis found Hawaii, Montana, and New York are the least affordable places to live relative to local incomes.

Todman went on to explain the provisions of a social spending bill that tackled the affordable housing problem across the country, but created waves in Washington.

Known as the Build Back Better Act, the $1.75 trillion bill was passed by House Democrats in November 2021, but it was a short celebration as it faced a roadblock in the Senate.

What happened to the Build Back Better Act

The social spending bill would have earmarked $150 billion for HUD. Among the existing programs that the bill would have benefited are public housing, Housing Choice Vouchers, and the Housing Trust Fund. It wanted to create new loan programs and revitalization funds. Overall, it would have provided funding for both new and existing programs.

The bill would’ve given millions to cities, governors, and county executives to help with the affordable housing crisis, Todman explained.

“We were preparing not just to receive but to push. We incentivized. We were teaching mayors and governors how to do it quickly,” she said.

The bill created a firestorm of controversy after failing to garner a key swing vote with Democrat Sen. Joe Manchin.

At the time, after the bill failed, Manchin adamantly declared to reporters, “No, no, no, it’s dead.”

And just like that, Todman shared on the Inman stage how the affordable housing bill was “torpedoed.”

As Todman returns to civilian life, following her public service in DC, she reflected on the issue that continues to plague Americans.

“We’ve got to do something to incentivize builders to build to the income levels we’re talking about.”

She praised how Americans live in the “best country in the world” and reassured the audience, “We have the systems that have been built to sustain the winds of any generation.”