Monique Johnson is Beneficial State Bank‘s Senior Vice President, Director of Client & Community Partnerships.
America’s housing crisis is more than a social challenge; it’s an economic emergency that demands the same attention we give to inflation or employment numbers.
Since 2015, the median sale price of a U.S. home has climbed by over $120,000, while average mortgage rates have almost doubled. Nearly half of renters pay more than 30% of their income just to keep a roof overhead. And even if housing were affordable, we simply don’t have enough of it: The U.S. faces a shortfall of more than 4.7 million homes.
The predictable consequence is a surge in homelessness: More than 770,000 Americans were homeless in January 2024, an 18% jump from the year prior and the largest single-year increase on record.
As more people struggle to afford this most basic need, banks have both the resources and experience to help address the housing crisis.
Why The Old Playbook Isn’t Working
Despite the magnitude of this problem, traditional housing strategies are failing to meet the moment. Conventionally, the focus has been on new construction as the only fix. Large-scale developments remain the biggest piece of this puzzle, but they can take years to complete, and soaring material costs, supply chain disruptions and regulatory hurdles mean some never break ground. Meanwhile, older, more affordable properties often fall into disrepair from years of underinvestment, leaving little to no net gain in supply.
A major driver of this shortfall is that affordable housing remains chronically undercapitalized. As of mid-2025, lenders held about $116 billion in loans for affordable housing across 3.5 million units. By contrast, the total U.S. mortgage market stood at approximately $12.94 trillion—the majority for market-rate housing.
There are models that work, but they remain neglected. Community Land Trusts and nonprofit housing developers can secure properties at affordable prices, yet face immense financing hurdles. Affordable housing projects typically require complex “funding stacks”—layering multiple sources of capital from tax credits, public programs and private lenders. Each layer adds costs, delays and administrative burden, making the financing phase alone stretch two or more years.
How Banks Can Lead Right Now
This financing maze is often the most time-consuming and expensive part of the process. Banks can play a critical role here: supporting developers through these complexities, understanding the layers, and helping move projects forward faster. Doing so would accelerate delivery, reduce costs and make more projects viable.
Banks have the tools to change this.
Preserving and rehabilitating existing affordable housing is one of the fastest, most cost-effective ways to expand affordability. In Portland, for example, city leaders plan to convert older buildings into affordable units, an approach that can be executed in months, not years, while preserving neighborhood character and limiting displacement. Yet this strategy is too often overlooked. Many older multifamily properties fall into disrepair and have limited financing options for needed improvements.
The result: Even as new units are built, the overall supply of affordable housing stagnates and millions of dollars in prior investments risk falling short of their intended impact. Most large banks do provide financing for affordable housing, but primarily for new Low-Income Housing Tax Credit (LIHTC) projects. The challenge, and opportunity, is to expand that lens to include preservation, ensuring existing properties remain both livable and affordable.
Innovative ownership models also hold promise. Cooperatives and Community Land Trusts, such as the East Bay Permanent Real Estate Cooperative, remove land from speculative markets to ensure permanent affordability and community stability. These approaches not only protect residents from displacement but also create shared wealth and neighborhood resilience. Banks can help scale them with patient acquisition capital, appropriately structured construction loans, and ongoing operating support.
A Legacy Banks Cannot Ignore
The current crisis didn’t arise in a vacuum. Restrictive zoning, decades of underbuilding, stagnant wages, rising construction costs and the lasting effects of the 2008 financial crisis have all contributed. Historically, financial institutions have also played a role through redlining and discriminatory lending practices that excluded entire communities from homeownership. While banks are not solely responsible for today’s housing crisis, they are uniquely positioned to help correct it.
With a foundation of stabilizing and expanding the supply of affordable housing, banks can also help open pathways to ownership by addressing structural inequities. For example, conventional underwriting relies heavily on credit scores while overlooking indicators like consistent rent or utility payments. This blind spot disproportionately harms minority communities, where systemic inequities limit credit histories—widening, rather than closing, the gap.
Expanding access to affordable housing requires financial products designed for low-income households. Banks can pair flexible financing tools with programs that create clear, attainable pathways to homeownership. Many already exist and can be scaled with the right partnerships. Individual Development Accounts (IDAs), for example, match the savings of low-income individuals to build equity for a down payment. Modernized credit assessments that incorporate rent, utility and subscription payments—along with recognizing long-standing banking relationships—would open lending to millions demonstrating financial responsibility.
The economic cost of inaction is staggering. In California alone, the housing shortage has cost the state an estimated $63.1 billion in lost economic output, $35.9 billion in reduced personal income and 386,628 jobs since 2008. By contrast, stable housing underpins workforce stability, consumer spending and community growth; all factors that contribute directly to bank performance.
A Defining Moment For Financial Leadership
The housing crisis is solvable, but not with half measures. Banks must reimagine their role, transforming from passive financiers to active partners. That begins with examining lending practices and forging partnerships with community lenders, developers and mission-driven investors.
Over time, institutions should set public, measurable lending goals, track progress and share proven models across the sector. Collaboration is equally vital, enabling solutions to scale faster and more effectively. This is both good business and good citizenship.
The financial industry helped shape the housing landscape we see today. Now, it has the power to help reshape it into one where stability, affordability and equity are the rule, not the exception.
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