The U.S. affordability crisis is often framed as a single, nationwide challenge—but in practice, it unfolds in very different ways across markets. Nowhere is that contrast more evident than in Los Angeles and Austin. Despite fundamentally different economic conditions and supply dynamics, both markets point to the same stark reality: demand for affordable housing far exceeds what exists today.
Viewed side by side, these markets offer more than contrast—they reveal how local economics, policy decisions, and capital flows shape outcomes, and where meaningful opportunities may emerge for developers, investors, and the communities they serve.
A national shortage with local realities
At a high level, the numbers are stark. Nearly a quarter of renters are severely cost-burdened, spending more than half their income on housing. Meanwhile, there are only about 35 affordable units available for every 100 extremely low-income renters.
Despite growing awareness and increased participation from both public and private sectors, the core issue persists: affordable housing simply does not pencil in many cases. Rising land, construction, and financing costs continue to outpace available subsidies and achievable rents.
That dynamic is universal. But how it manifests, and how markets respond, is anything but.
Los Angeles: High barriers, deep need
Los Angeles exemplifies the challenges of a mature, supply-constrained coastal market.
Despite minimal job growth and a declining population since 2020, housing costs remain stubbornly high. Rents have risen steadily, while home prices have surged even faster, creating one of the most difficult ownership environments in the country. Today, owning a home in Los Angeles costs roughly 3.3 times more than renting.
At the same time, new supply has lagged relative to the size of the market. While tens of thousands of units have been delivered in recent years, this represents only modest inventory growth.
The result is a market where affordability challenges exist at nearly every income level, from deeply subsidized housing to workforce housing for middle-income earners.
A subsidy-driven system
To address these challenges, Los Angeles relies heavily on structured, subsidy-driven solutions, most notably the Low-Income Housing Tax Credit (LIHTC) program.
This approach is designed to support deeply affordable housing (typically 30–60 percent of area median income), but it comes with tradeoffs:
- Complex, layered capital stacks
- Lengthy approval timelines
- Heavy regulatory oversight
Even with new policies like Executive Directive 1 (ED1), which aims to streamline approvals and accelerate development, many projects remain financially infeasible without significant subsidy.
Los Angeles demonstrates what happens when high costs and regulatory constraints collide. Affordability gaps widen, and solutions require deeper intervention.
Rent to median renter household income radio
Rent to median renter household income radio
| Year |
Los Angeles |
Austin |
| 2010 | 0.46 | 0.29 |
| 2011 | 0.5 | 0.29 |
| 2012 | 0.5 | 0.3 |
| 2013 | 0.51 | 0.31 |
| 2014 | 0.53 | 0.31 |
| 2015 | 0.54 | 0.3 |
| 2016 | 0.53 | 0.29 |
| 2017 | 0.51 | 0.29 |
| 2018 | 0.51 | 0.29 |
| 2019 | 0.49 | 0.29 |
| 2020 | 0.46 | 0.27 |
| 2021 | 0.52 | 0.34 |
| 2022 | 0.52 | 0.3 |
| 2023 | 0.5 | 0.29 |
| 2024 | 0.46 | 0.25 |
(Source: RealPage, U.S. Census Bureau)
Austin: Rapid growth, short-term imbalance
Austin tells a very different story, defined by explosive growth and rapid supply expansion.
Since 2020, the city has been one of the fastest-growing in the country, with job growth exceeding 20 percent and population increasing by more than 10 percent.
Developers responded aggressively, delivering nearly 100,000 new apartment units in just five years. By any measure, that is an extraordinary expansion that far outpaced most major markets.
When supply catches up
This surge in supply has had a notable effect. Rents have declined in the short term, and overall rent growth since 2019 has remained modest.
While this may appear to improve affordability on the surface, the reality is more nuanced:
- Ownership costs are still approximately 2.5 times higher than renting
- Deep affordability challenges persist for lower-income households
- Subsidized housing remains critically undersupplied
Austin illustrates a different side of the crisis. Even when market-rate housing becomes more attainable, it does not eliminate the need for targeted affordable housing solutions.
Deliveries as a % of inventory
Deliveries as a % of inventory
| Year |
Los Angeles |
Austin |
| 2010 | 0.005 | 0.016 |
| 2011 | 0.001 | 0.005 |
| 2012 | 0.002 | 0.013 |
| 2013 | 0.005 | 0.036 |
| 2014 | 0.009 | 0.039 |
| 2015 | 0.007 | 0.045 |
| 2016 | 0.009 | 0.042 |
| 2017 | 0.008 | 0.041 |
| 2018 | 0.009 | 0.036 |
| 2019 | 0.008 | 0.036 |
| 2020 | 0.01 | 0.04 |
| 2021 | 0.009 | 0.045 |
| 2022 | 0.007 | 0.05 |
| 2023 | 0.009 | 0.049 |
| 2024 | 0.006 | 0.093 |
| 2025 | 0.008 | 0.049 |
| 2026 | 0.012 | 0.029 |
(Source: RealPage, U.S. Census Bureau)
A flexible, market-driven model
Unlike Los Angeles, Texas markets often rely on tax-exempt structures such as Public Facility Corporation (PFC) and Housing Finance Corporation (HFC) deals.
These structures:
- Enable faster execution
- Support workforce housing (typically 60–80 percent AMI)
- Attract private and institutional capital
They offer greater flexibility and scalability, but typically do not reach the deepest levels of affordability without additional subsidy.
Austin’s model highlights how speed and flexibility can drive supply, and how market-driven approaches alone cannot fully solve affordability challenges.
Two markets, one core issue
Full affordable planned housing completions in Austin and Los Angeles
Full affordable planned housing completions in austin and los angeles
| Year |
Los Angeles |
Austin |
| 2025 |
3429 |
6353 |
| 2026 |
3300 |
4234 |
| 2027 |
3428 |
1522 |
(Source: Yardi Matrix)
Placed side by side, Los Angeles and Austin represent two fundamentally different housing ecosystems:
- Los Angeles: High-cost, highly regulated, subsidy-dependent
- Austin: High-growth, supply-responsive, capital-efficient
Yet both arrive at the same conclusion: the private market, on its own, cannot close the affordability gap.
In Los Angeles, the constraint is feasibility. Projects are challenging to finance and build so there’s a lack of affordable housing at every income level.
In Austin, given the huge expansion of supply in market rate housing, the constraint is the lack of regulated housing for the lowest-income individuals.
The path forward: Aligning capital, policy, and demand
Despite these challenges, there are signs of progress.
Institutional investors are increasingly recognizing affordable housing as a stable, long-term investment opportunity, supported by government programs, tax advantages, and durable demand.
At the same time, policymakers are exploring ways to:
- Streamline approvals
- Expand tax credit programs
- Preserve existing affordable housing stock
- Encourage public-private partnerships
The opportunity lies in bridging the gap between these forces, aligning capital with policy to unlock scalable solutions.
What it means for clients
For developers and investors, the takeaway is clear: success in affordable housing requires a market-specific strategy.
- In high-cost markets like Los Angeles, expertise in navigating subsidy programs and layered capital stacks is critical.
- In high-growth markets like Austin, understanding supply cycles and leveraging flexible financing structures can create opportunity.
Across both, the ability to structure deals creatively and align with evolving policy frameworks will define outcomes.
Let’s move the conversation forward
The affordability crisis is complex, but it is not unsolvable. It requires collaboration, innovation, and a deep understanding of how local dynamics shape national challenges.
Connect with a Walker & Dunlop Affordable Housing specialist to explore strategies tailored to your market, and subscribe to Zelman Insights for ongoing analysis shaping the future of housing.
