Already critically short in many regions, the supply of affordable rental and owner-occupied housing will continue to shrink unless more flexible zoning regulations are adopted locally to allow greater production of mixed-income housing. That was the consensus of a group of industry experts meeting at the Urban Land Institute's November meeting in Las Vegas.

Recent statistics from the National Housing Conference show that four million working families in the United States have critical housing needs – meaning that they are spending 50 percent of their incomes on housing. Despite low mortgage interest rates, many families are continuing to slip through the cracks as the income gap between the rich and poor grows wider, said William H. Hudnut 3d, ULI's senior resident fellow.

Unless more incentives are provided to the private sector to enter the affordable housing market, and misunderstandings about affordable housing can be cleared up, "the housing crunch will continue to get worse, threatening the economic and social stability of urban areas, he said.

A major local barrier to affordable-housing production is the belief by municipal governments that lower-priced housing represents little more than a drain on city resources, in terms of the tax revenue generated versus the need to provide occupants with public services, said Paul S. Barru, president of BHI Inc. in Littleton, Colo.

"When decisions are made on the type of development that is in the best interest of the community, municipalities will shoot down affordable housing," Barru said. Officials also often overlook the probability of commercial and retail development following such housing, he said.

"They are not making the connection between job generation and the provision of housing," Barru said.

An extensive effort to raise awareness among the public of the multiple benefits of affordable housing is needed to convince local officials to overhaul outdated zoning regulations that exclude a variety of land uses and shut out mixed-income projects, Barru said. The industry estimates that 1.7 million new units nationally are needed per year to meet anticipated population growth and household formation over the next two decades.

Viewed only as supply versus demand, J. Ronald Terwilliger, managing partner of Trammel Crow Residential in Atlanta, said the housing industry is capable of building enough units to meet the need. However, the problem is "what they cost and where they are being built," he said. "We've got to find more ways to get affordable housing in the right places, closer to where the jobs are."

Particularly in the inner suburbs, excessive land costs and impact fees push upfront costs so high that developing low-cost housing is "nearly impossible," Terwilliger said. As a result, most affordable housing development occurs in the outer edges, stretching commutes and increasing transportation costs for workers.

However, although this housing-job gap has been well documented, and private sector incentives are available to develop more close-in affordable housing, progress remains very slow, he said. Restrictive zoning still prevalent in many communities is the result of municipalities attempting to respond to residents' demands for protection of their property values, said William A. Fischel, professor of economics at Dartmouth.

"Homeowners express so much anxiety over their property values because they have so much at stake in their homes. People of ordinary means are willing to put all their savings into housing, and they cannot diversify that investment," Fischel said. That makes them development opponents who embrace the 'not-in-my-backyard' sentiment. "We need to respond to their fear of financial risk."

Hudnut said that the best way to diffuse public opposition and give local officials sufficient political cover to advocate flexible zoning and housing choice is to engage all community stakeholders in every step of an alternative development proposal, and to educate them on what affordable, higher-density housing is and is not.

"Affordable does not mean undesirable. Higher density does not mean towers," he said. "Projects can get built when you work with the community." But the environment "has to be politically safe enough for politicians to take a stand for change."

The American Planning Association's model land use code, released earlier this year, revamps codes developed in the 1920s. The model code, which contains provisions for more flexibility and a greater mix of land uses, is being issued to state legislatures as a guide for implementing smart growth measures through legislative procedures, said Gus Bauman, a lawyer with Beveridge & Diamond in Washington, D.C. .