Nicolas Retsinas is the director of the Joint Center for Housing Studies which analyzes the ways in which housing policy and practices are shaped by economic and demographic trends. He says that that prosperity, ironically, has contributed to the shortage of affordable housing.

Q: How severe is the affordable housing shortage?

Retsinas: Most Americans are the best housed they have ever been. For the first time in our nation's history, over two-thirds of all families own their homes. However in the midst of this unprecedented prosperity, over 13.7 million households spend more than half their income on housing. Working families are struggling to afford even modest rentals. In fact, renters in the bottom quartile of the income distribution saw their real income decline in recent years while rents have outpaced inflation. At the same time, rising home prices make it more difficult to move into homeownership. The result: families doubling-up, increasing homelessness and longer commutes as families search far and wide for affordable housing.

Q: What are the factors that have led up to an affordable housing crunch?

Retsinas: A byproduct of our nation's prosperity has been increased demand for housing. That has resulted in increased prices. For many highly skilled Americans, incomes have kept pace. For others in low-skilled, low wage jobs, incomes have lagged. Historically, the federal government has helped fill the gap. Over the past two decades, the federal government has substantially reduced its budget commitment to affordable housing. At the same time, existing government-subsidized units are being lost from the affordable housing inventory as private owners take advantage of expiring contracts to exit federal programs and charge higher market rents. Approximately 90,000 units have been lost in the past five years.

Q: What sorts of policies could cities and states adopt that would encourage affordable housing?

Retsinas: While many states and cities have identified housing as a critical problem, few have allocated substantial resources. Beyond dollars, states and cities could support affordable housing by adopting inclusionary zoning -- where a percentage of new units are to be affordable -- by providing technical assistance to community-based non-profits so they can produce and preserve more units in low income communities, and by reengineering regulatory barriers that unnecessarily increase the cost of housing.

Q: How will the current administration's policies impact the problem?

Retsinas: In the recent presidential campaign, housing was a forgotten issue. While Congress modestly increased the numbers of vouchers and the low income housing tax credit program, there is clearly an unfinished agenda. The Bush Administration has an opportunity to revisit how to encourage the private sector to build and rehabilitate an increased supply of affordable housing, and to support the efforts of state and local governments. One way to start is to examine our nation's largest housing subsidy program - the mortgage interest deduction. Today, 90% of that benefit goes to families earning over $40,000 a year. During the campaign, candidate Bush indicated an interest in providing a parallel tax incentive to enable low-income families to become homeowners.

Q&A Produced by Miranda Daniloff