Think tank’s brief finds that Tennessee communities face a critical housing shortage, proposes policy solutions to increase supply and improve affordability
NASHVILLE – After a decade of rapid growth, Tennessee is facing an increase in housing demand that communities are struggling to meet, finds a new policy brief released today from nonpartisan think tank ThinkTennessee. This shortage contributes to rising housing costs that are becoming increasingly unaffordable for Tennessee families, leading communities to look for new tools to construct more homes and the infrastructure needed to support them. The brief gives an overview of the state’s current housing challenges and provides policy recommendations to increase housing supply and fund infrastructure needs to support housing.
“From 2020 to 2023, Tennessee only added 7 houses for every 10 jobs,” said Erin Hafkenschiel, president of ThinkTennessee. “While this level of growth is exciting, it also has put the squeeze on our local communities’ housing supply and infrastructure. But this challenge is not insurmountable. As our brief shows, a modification of existing tools can allow Tennessee to address both needs, from identifying sources of revenue that can be directed towards attainable housing, to programs that encourage the production of more affordable homes, including low-income tax credits and land banks.”
From 2020-2023, Tennessee added more than 216,000 jobs but only 153,975 new homes. In part due to our lack of housing supply, costs have increased significantly for Tennessee families, especially for lower-income households. Since 2013, median monthly housing costs increased 32%, and more than a quarter (26.5%) of Tennessee households are cost-burdened. To keep up with Tennessee’s growth, local communities will need to construct more homes and increase spending on critical infrastructure – such as roads, parks, schools, and community services – to support new jobs and residents.
The brief highlights four policy options to improve housing supply and affordability and fund new infrastructure, specifically by expanding and modifying existing programs:
- Leverage the state and federal Low-Income Housing Tax Credits (LIHTCs) to increase housing that is affordable to all Tennesseans,
- Expand land banking authorization to more communities,
- Expand eligibility for local governments to raise funds for infrastructure, and
- Use a portion of the Real Estate Transfer Tax to support housing and infrastructure.
To read the full policy brief, Breaking Ground: Local Tools for Housing and Infrastructure, visit thinktennessee.org.
