As millennials begin to think about buying homes, and the housing market continues to improve overall, 2015 looks to be “a year of housing opportunity,” according to U.S. Housing and Urban Development Secretary Julian Castro. But ensuring that affordable housing is available where it’s needed most, and also that qualified borrowers can access the financing necessary to afford it in the first place, remain real challenges in America.

Castro, Zillow Chief Economist Dr. Stan Humphries and a panel of housing experts and observers met last week in Washington, D.C., at the first event in Zillow’s Housing Roadmap series, which will explore housing issues across the country. The goal was to assess the housing market, air lesser-known housing issues and solicit new ideas for addressing challenges.

Broadening access to affordable housing and more affordable housing finance were among the top priorities discussed. Speaking the morning after President Barack Obama laid out a staunchly pro-middle-class agenda in his sixth State of the Union address, Secretary Castro laid out why he said he thinks 2015 will be “a year of housing opportunity.” Chief among his reasons for optimism include recent cuts to certain Federal Housing Administration (FHA) insurance premiums, which could save borrowers hundreds of dollars per year.

These cuts and other factors will put more money in the pockets of typical Americans, which in turn could help make housing more accessible and affordable, he said.

“The confluence of a better economy, wages going up and gas prices going down creates breathing room to save money and purchase their first home,” Castro said.

But while most agree that small policy tweaks aimed at reducing costs for some borrowers certainly can’t hurt, much of the current weakness in housing stems from increasingly expensive rental housing demanding an ever-larger share of typical tenants’ income. High rents make saving for a down payment and saving enough money to transition into homeownership difficult. Rents have grown more than 50 percent since 2000, while incomes have only grown at half that pace, Humphries noted.

“You don’t have to be a housing economist to see there’s a problem there,” Humphries said.

Castro said solving that issue starts – again – with simply putting more money in Americans’ pockets.

“In terms of moving from renting to buying, wage stagnation has been a challenge,” Castro acknowledged. “But it’s moving in the right direction. Lower gas prices will mean more savings. Home prices are leveling off, so getting a loan for a house is within reach. All those things add up to greater opportunity to move from rental housing into homeownership in 2015.”

A Poverty Problem, Not a Housing Problem

During a panel discussion following Castro’s remarks, experts expanded on the rental affordability issues identified by Castro.

“We do not have the affordable rental housing resources to meet (demand),” said Barry Zigas, director of housing policy at the Consumer Federation of America.

Creating, maintaining and ensuring access to affordable rental housing in fast-growing and desirable coastal markets is far more difficult than in declining Midwestern metros or more flexible Southern cities. Demand for affordable housing is concentrated in areas that often have difficulty supplying it or in areas that require more resources for typical residents to afford it.

“America, at a national level, doesn’t have a housing problem,” said Harvard University economics professor Ed Glaeser during a discussion following Castro’s remarks. “It has a poverty problem. It has an inequality problem.”

Glaeser said that federal Low-Income Housing Tax Credits – subsidies designed to make rental housing more affordable and accessible – only work in growing, coastal cities like New York or Boston. They don’t work in a city like Detroit, which already has sufficient housing as a result of tens of thousands of residents leaving in recent years; nor do they work in places like Atlanta or Houston, which boast local zoning policies and regulations that make it easier to build new housing as it’s needed.

“There’s plenty of housing out there. If we just bus everyone to Buffalo or Cleveland, problem solved,” said Mark Calabria, director of financial regulation studies at the Cato Institute. “Obviously, we can’t do that.”

One potential solution to the problem of insufficient affordable rental housing supply and the increasing unaffordability of renting in general is to grow what is currently a small niche of renting out single-family homes. Carol Galante, former FHA Commissioner and current professor in the Department of City and Regional Planning at the College of Environmental Design at the University of California in Berkeley, said this currently “boutique” industry could easily be adopted by larger operations.

Part of the reason single-family rental housing could offer solutions is through rent-to-own programs that help tenants today build up equity and savings for homeownership tomorrow. But because many larger investors bought up previously distressed single-family homes at a steep discount, if and when they choose to sell their portfolio at market value – rather than selling to current tenants after several years – they stand to make a large windfall.

As a result, instead of rent-to-own, according to Zigas, most large firms in the single-family rental space are currently more interested in “rent-to-sell” strategies.

A Broader Conversation

At the morning forum, Zillow aimed to start new conversations and identify new destinations for a 2015 road trip across America, after years in which seemingly the only substantive policy discussions happening in Washington were centered around housing finance reform. While solving housing finance issues is critical to solving a number of other housing issues, it is far from the only challenge in the housing market.

Mitra Kalita, executive editor of Quartz, identified a number of housing issues that have thus far been flying under the radar. The sharing economy – notably, through firms like Airbnb, which allows homeowners to offer couches, rooms and entire properties for rent for short and longer-terms – is presenting a number of challenges and solutions to affordability problems. Not only does it help create supply, Kalita said, it also helps homeowners broaden their income stream to afford higher mortgage or rent payments.

Other issues identified by the panelists included:

• The so-called “inheritance economy,” in which wealthy relatives leave large sums of money to their heirs, potentially distorting the market by inflating the number of all-cash purchases.
• How climate change is impacting where we build and how we design.
• How aging in place is changing the demands we’ve traditionally placed on suburbs, as access to healthcare and more robust public transportation options become more desirable for older suburban residents.
• Better use of common resources, including more widespread adoption of land trusts.
• The prevalence of micro-housing and more density as a shift in housing preferences.
• Introduction of more assumable or portable mortgages, particularly as mortgage interest rates rise and/or fixed-mortgages get more expensive.
• Immigration and gentrification, and how certain ethnic communities are re-making tired neighborhoods.

A full video of Zillow’s conversation with Secretary Castro can be found here. This is the first of many conversations Zillow expects to have throughout the year. If you have a housing idea you think could help solve these or any other housing issue, or if you have a story to tell, please share with us on social media, using the hashtag #HousinginAmerica.