The World’s Housing Crisis Doesn’t Need a Revolutionary Solution

The World’s Housing Crisis Doesn’t Need a Revolutionary Solution

Harvard Business Review

From Lagos to London, people are stuck in inadequate homes or pay so much of their incomes for housing that they forego other necessities. Lack of access to decent affordable housing is an issue in rich and poor economies. Even in rich countries, low-income families in inadequate housing have higher levels of unemployment and their children are more likely to do poorly in school and quit sooner than other students. High housing costs squeeze middle-income families, and in the costliest cities, even households earning far more than the median income can be financially stretched by rent of mortgage payments, limiting the growth of the local economy.

For decades, policy makers and private-sector leaders have tried to solve the affordable housing problem, yet it has only grown more severe and is on track to expand dramatically as urbanization plays out in developing economies. Today, about 330 million households worldwide are stuck in slums or inadequate housing or are paying too much of their incomes for housing; by 2025, this number could rise to 440 million households and about 1.6 billion people — or one-third of the entire urban population. Simply to replace or refurbish the world’s substandard housing and build the homes needed to accommodate new low-income urban households by 2025 could cost $9 trillion to $11 trillion, not including land, which could raise the cost to $16 trillion.

However, we believe that there is a plausible alternative, because there are clear solutions that — under proper management — can narrow the affordable housing gap substantially by 2025. In our research, we identify four “levers” to manage affordable ho

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