A Market Turning Red: What Today's Housing Pressures Mean - and What We Can Do Next

From Left: Jessica Farr, Federal Reserve Bank of Atlanta; Matt Nicholson, The Clear Blue Company; Brian Straessle, The Sycamore Institute

By Jaclyn Tidwell | Programs & Strategy for Cumberland Region Tomorrow 

This blog is the second of a series based on the November 2025 Power of 10 Summit. 

For more than a decade, housing affordability challenges have been intensifying across the state. A simple ratio—home prices or home values compared to median income—tells a striking story: a ratio of three is considered reasonably affordable. For years, we were already drifting above that benchmark. Then the pandemic hit, and the map didn’t just turn red—it turned blood red.

For more information, visit The Sycamore Institute here.

What was once perceived as a “big-city problem” has spread across suburban communities, small towns, and rural areas. This is no longer a coastal or urban challenge. It’s a statewide reality.

So what do we do about it?

The insights shared here come from a panel conversation with Jessica Farr of the Federal Reserve and Matt Nicholson of the Clear Blue Company, moderated by Brian Straessle of the Sycamore Institute. This recent conversation among developers, planners, policymakers, and housing finance leaders highlighted a core truth: there is no single silver bullet. Housing affordability is shaped by dozens of forces—regulation, financing, labor supply, zoning, interest rates, permitting timelines, construction costs, and community attitudes. Tackling the problem requires a full toolbox and a willingness to collaborate.

Below are the clearest takeaways.

1. The Cost Crisis: It Takes Too Much Time and Too Much Money to Build Housing

One of the most important affordability drivers is the time and money required to produce new homes. Every step—zoning, permitting, review, infrastructure coordination—adds delays and costs. Those costs ultimately show up in rents and prices.

Three levels of government influence this:

• Local governments decide zoning, land use, parking requirements, project approvals, and infrastructure availability.

• State governments shape environmental processes, planning mandates, tax policy, and incentives.

• Federal policy influences interest rates, tariffs, immigration (and thus labor supply), and long-term capital markets.

  
  

The result is a complex system where timelines can stretch months—or years. In some places, a “fast” approval still takes five months. In others, three years is normal.

Streamlining matters. Developers consistently emphasized that predictability can be more valuable than savings. A slightly more expensive city with a reliable approval timeline can win out over a cheaper one with endless uncertainty.

2. Housing Supply Matters — All of It

Panelists agreed: we don’t just need affordable housing. We need all kinds of housing.

• Market-rate

• Workforce

• Low-income

• Multifamily

• Single-family

• Accessory dwelling units

• Modular homes

  
  

In too many communities, the single biggest obstacle isn’t financial—it’s cultural. NIMBYism persists everywhere, rural and urban alike. But the resistance is often rooted in fear and misconceptions. When residents see renderings, tour existing communities, or meet the teachers, nurses, and firefighters who would live there, attitudes often soften.

Humanizing affordable housing changes the conversation.

3. The Macro Pressures Are Real — and Hard to Overcome

Beyond local land use battles, broader economic conditions have made housing harder to deliver:

• Rising interest rates raise mortgage payments for buyers and carrying costs for developers.

• Inflation—even after moderating—continues to increase labor, materials, and land costs.

• Tariff uncertainty makes it difficult to budget for long-term projects.

• Immigration policy shifts reduce access to construction labor.

• Labor market fluctuations influence both consumer sentiment and developer risk tolerance.

  
  

Developers, lenders, and policymakers all must balance inflation control with maintaining enough demand and financing capacity to keep housing production going.

4. Key Tools for Affordability — and Why They’re Hard to Use

The Low-Income Housing Tax Credit (LIHTC)

The LIHTC program remains the nation’s largest and most effective affordable housing engine. But challenges persist:

• Property tax assessments on LIHTC properties can be higher than for market-rate projects, undermining project viability.

• Rural communities often lack payment-in-lieu-of-tax (PILOT) agreements needed to make projects pencil.

• An emerging idea—a workforce housing tax credit—could expand affordability for households at 80–120% of area median income.

  
  

Zoning Reform and Missing-Middle Housing

Reforming zoning won’t immediately create new affordable units, but it opens the door to a broader range of price points and reduces pressure on the lower end of the market. Increasing density, allowing accessory dwelling units, and diversifying housing types all help broaden choices.

Shared Equity and Community Land Trusts

These programs create permanent affordability while still enabling wealth building. They’re powerful but understaffed and underfunded relative to need.

Innovative Construction Methods

Modular and prefabricated housing can reduce costs—but only when projects are close enough to factories to minimize transport expenses.

Preserving the Affordable Homes We Already Have

Preservation is far cheaper than new construction, and yet naturally occurring affordable housing continues to be lost to redevelopment pressures.

5. New Tools Are Emerging — and Worth Watching

State and local governments have begun authorizing new approaches:

• Voluntary inclusionary zoning

• Single-stair multifamily building options

• Infrastructure financing tools through industrial development boards

• Partnerships with faith-based institutions enabled by federal RLUIPA provisions

  
  

One standout example: a North Nashville partnership enabling a church to develop a 254-unit senior affordable community on its own property. Similar models are emerging with hospitals, universities, and other mission-driven institutions.

6. The Mindset Shift We Need: Housing Is Infrastructure

Perhaps the most striking takeaway was a call to see housing the same way we see roads, water systems, and utilities: as core infrastructure for economic growth.

Businesses increasingly cite lack of housing as a barrier to expansion and location decisions. Cities have already lost out on major employers because their workforce lack attainable places to live.

Housing is not a social service. Housing is economic infrastructure.

7. A Call to Action: Education, Collaboration, and Shared Responsibility

Everyone has a role to play—governments, developers, banks, nonprofits, institutions, and residents. But perhaps the most important work is cultural:

• Reduce stigma around affordable housing. Changing the narrative from “charity” to “community investment” helps shift public opinion. Highlight the contributions of residents, the stability these homes bring to neighborhoods, and the economic benefits for all.

• Educate residents and decision-makers. Many fears are rooted in misinformation. Clear, accessible information about costs, benefits, and long-term outcomes can turn opponents into allies.

• Foster collaboration across sectors. Affordable housing can’t be solved by developers, nonprofits, or governments alone. Coordinated planning, shared resources, and joint ventures multiply impact.

• Hold all stakeholders accountable. Cities, counties, and states must set clear goals, track progress, and be transparent about both successes and failures. Developers and financiers must align with community priorities, and residents must participate in shaping solutions.

  
  

The red-hot housing market isn’t just a headline—it’s a signal. It’s telling us that our state’s growth, opportunity, and prosperity are at stake if we fail to act. We need strategies that are pragmatic, collaborative, and bold. Incremental change alone won’t protect future generations from escalating costs and limited options.

Ultimately, the message is clear: we must treat housing as a cornerstone of economic and social well-being, not a discretionary amenity. By combining policy innovation, financial tools, community engagement, and cultural change, we can slow the bleeding on the housing map and, over time, restore affordability.

The path forward won’t be easy—but it is possible. And the time to act is now.