There’s a growing housing crisis that’s impossible to ignore. Consider the stats: Nearly 3 billion people lack access to housing that is both safe and connected to basic services like energy, water and sanitation. Around 40% of the world’s population lives in houses located far away from jobs and opportunities. And 300 million people are homeless.This translates into a need to build 96,000 affordable homes worldwide every day from now until 2030. It’s a problem that affects poor and rich countries alike. In Asia and Africa, where most urban growth is happening, many residents and migrants find informal settlements, often referred to as slums, to be the only affordable and available option. Informal settlements are expanding faster than infrastructure can keep up in many rapidly growing cities. In wealthier countries, housing costs are rising faster than incomes, pushing people to move further away from jobs and opportunities.Meanwhile, threats are growing. More frequent flooding, extreme heat and other climate shocks are exposing just how vulnerable many urban communities are, especially informal settlements and households already struggling to access basic services.The global housing crisis is therefore not just about supply. It’s about rising costs, deepening inequality and increasing exposure to risk.Expanding and upgrading housing is one of the most powerful levers cities have to respond to these challenges. But there’s a right way and a wrong way to do it. Done effectively, housing can build community, address inequities, and expand access to essential services, jobs and opportunities. Done ineffectively, housing will exacerbate challenges facing people, nature and the climate.Nearly three-quarters of the urban infrastructure that will exist by 2050 has yet to be built. This presents a triple opportunity: building low-carbon, energy-efficient housing; ensuring it is resilient to growing climate risks like extreme heat and flooding; and locating it where it is connected to services and opportunities.Indeed, as city leaders confront their respective housing crises, the most important questions to consider are not just how much housing to build, but where it’s built, who it’s for, and how it’s built and financed. These choices will define whether housing becomes part of the solution or continues to undermine the health and wellbeing of people and the planet. Rocinha in Rio de Janeiro is the largest favela in Brazil. Photo by Giongi/Shutterstock Where Housing Is Built Determines Access, Safety and OpportunityWhere housing is built is one of the most consequential decisions shaping how cities function and who thrives.The location of housing directly affects the efficiency of labor markets — the costs (both time and money) people face in accessing jobs and other opportunities and people’s productivity. Locating housing close to businesses, restaurants, shops and high-quality public transit — known as ‘transit-oriented development’ — provides economic opportunities with climate co-benefits. Household transport costs and emissions can fall as walking, biking and public transit replace cars. Reliable transit helps connect residents with jobs, education, healthcare and more. Businesses become better connected to workers. Indeed, research shows that reducing vehicle miles traveled through transit-oriented development, mixed land use, and co-location of jobs and housing can reduce GHG emissions 23-26% by 2050.The U.S. state of Colorado has established itself as a national leader in transit-oriented development. The state passed a landmark law in 2024 that requires local governments to allow greater density of housing near transit, followed by a law legalizing a wider range of housing types. Analysis shows that shifting from sprawl to more compact development could reduce statewide vehicle miles traveled by roughly 11% and transportation-related greenhouse gas emissions by a similar margin. Residents can walk, bike or take public transit to fulfill their daily needs as an alternative to driving.The location of housing also greatly affects the risks and costs borne by communities. In the Global South, informal settlements are often located in areas prone to flooding, earthquakes or other environmental hazards. Climate change is worsening many of these threats. For example, Nairobi, Kenya experienced devastating floods in informal neighborhoods in both 2024 and 2026, resulting in dozens of fatalities and thousands of families displaced.Lastly, it’s essential to build housing in places serviced with key infrastructure like streets, energy, clean water, sanitation and drainage. Without these basic services, households and communities must self-provide them, often in ways that are ultimately more expensive, polluting or unhealthy.Iloilo City in the Philippines offers a strong example of how civil society and government can work together to create more resilient housing in a flood- and typhoon-prone city. Community groups led by the Iloilo chapter of the Homeless People’s Federation of the Philippines worked with the local government since 2005 to build flood protection. The groups implemented nature-based solutions such as mangrove forests and green spaces, as well as traditional grey infrastructure like slope reinforcements and drainage improvements They also relocated displaced households to safer, less flood-prone locations that were formally integrated with city services. Iloilo City, Philippines. The government has been working with local communities to build flood-resistant housing. Photo by MDV Edwards/Shutterstock Who Housing Is Built for Determines Inclusion, Equity and Shared ProsperityWho lives in, builds or designs housing helps determine whether cities become more inclusive or more unequal.It’s low-income and marginalized groups who most often live in precarious conditions. They are poorly connected to economic and other opportunities while disproportionately exposed to climate risks. When city leaders ignore this reality, they reinforce spatial and economic exclusion, miss mitigation opportunities, and fail to protect the most vulnerable.Equitable housing strategies must recognize community members as relevant actors rather than passive beneficiaries. Community-led data collection, participatory planning, and local upgrading efforts implemented as a partnership between cities and communities have proven effective. Combining the equitable housing and climate agendas can encourage solutions that promote inclusion and more sustainable patterns of growth.Brazil provides a positive example. The country’s federally funded Periferia Viva program aims to improve living conditions in dozens of informal settlements, known locally as favelas and comunidades. Rather than a top-down approach, the settlements’ residents participate in the planning, implementation and maintenance of upgrades. Many of these projects also focus on building resilience to climate change, such as through flood mitigation.And in Iloilo City, the Homeless People’s Federation of the Philippines project was meaningful not just for moving residents away from dangerous areas, but for how it was conducted. The project involved displaced households closely in the process. Collaboration between the city and community protected vulnerable groups through measures such as public land banking, community savings accounts, and using sustainable construction methods to execute community-led designs. A favela in Rio de Janeiro, Brazil. The country’s Periferia Viva program aims to improving living conditions in informal settlements, in participation with residents. Photo by Stock Photos 2000/Shutterstock How Housing Is Built Shapes Quality, Resilience and the Cost of LivingHow housing is built and the construction choices made — the materials, design, location and connections to infrastructure — determine whether homes provide long-term stability or create ongoing strain.Materials used matter greatly in terms of resilience, comfort and carbon impact. This is true for both new and existing buildings. Retrofitting existing housing through passive cooling, insulation and renewable energy can simultaneously reduce emissions, lower household energy costs and improve resilience. These upgrades increase disposable income while strengthening household and citywide climate adaptation. Just as important are connections to essential urban infrastructure and services such as water, sanitation, electricity and transportation. When these services are integrated into housing, they enable healthier households, support education, expand access to opportunities and create communities that are both lower carbon and more resilient to climate shocks. In many places, low-income households face a double burden: living in inefficient housing that traps heat, which then leads to spending great sums on electricity to run fans. As the risks of extreme heat in cities grow, thermal comfort is no longer a luxury, but a health necessity.Therefore, it’s essential that city planners think both about building materials that can address growing climate risks as well as connections to green energy, ample water, sanitation and more. In Mexico, the Solar Roofs for Wellbeing (Techos Solares para el Bienestar) initiative integrates distributed solar generation directly into the financing and construction of low-income housing. By generating their own power, families can reduce their annual electricity bills by an average of 67%, with reductions of up to 89% in summer and 49% in winter. The program also incentivizes the growth of a local workforce trained in solar installation and ‘cool roofs,’ creating new green jobs. Apartment buildings in Mexico City. Photo by quiggyt4/Shutterstock How Housing Is Financed Determines Affordability, Access and RiskHousing is not just a physical asset. It is many families’ largest single investment. It is shaped by financial and legal systems that determine who can access it, under what conditions and at what cost. Beyond the physical availability of homes, mortgages, interest rates and insurance all influence who can afford housing and how rising risks translate into increased costs for households.Financial and legal frameworks can either expand or block access, depending on how they’re structured. In many places, formal credit is linked to land tenure and legal ownership, excluding households in informal settlements or without clear title. This reinforces existing inequalities, limiting the ability of lower-income households to invest in safer, higher-quality housing or to upgrade over time. Similarly, some service subsidies and infrastructure investments require formal ownership, leaving informal households without access to improved water, sanitation or energy. These gaps increase the cost of living for the most vulnerable, drain productivity and increase exposure to health risks.As climate risks increase, insurance is also becoming more costly — and more necessary. In the U.S. state of Florida, 15-20% of homeowners are estimated to be foregoing insurance despite frequent hurricanes due to rising costs and uninsurable locations. Elsewhere, wildfires, landslides and floods drive up those costs. This is not just a Global North issue. Mahila Housing Trust has pioneered the use of parametric heat insurance in Gujarat, India, helping households in informal settlements confront extreme heat by offsetting lost income and supporting medical expenses caused by heatwaves. As these climate risks increase, so will the total cost of housing. Addressing these challenges requires rethinking how housing is financed and delivered. Innovative blended finance instruments and programs, likely combining well-structured subsidies, creative savings schemes and supportive legal frameworks, can expand access while improving resilience. Montgomery County, Maryland, provides one example of creative financing. The county participates as an equity investor, accepting 5% profit instead of the more customary 15-20% private sector return, which saves developers millions of dollars off the project’s cost.Meanwhile, well-designed land use regulations such as appropriate density standards can help ensure housing is well-located. Others, such as exclusionary zoning practices, can limit access by what they allow or require from builders. For example, rules that restrict certain housing types may increase prices and put homes out of reach for many households.Ultimately, financing systems shape not just who can afford housing, but who can live in safe, well-located, resilient communities. Bethesda, Maryland. The county’s innovative finance program helps housing developers save money. Photo by Nicole Glass Photography/Shutterstock Solving the Global Housing Crisis Requires a Systems ApproachHousing is not a single policy challenge. It is a set of interconnected decisions that shape how cities grow and who they serve — decisions involving different levels of governments, communities and the private sector. The recent European Commission’s Affordable Housing Act 2026 is an example of a systems approach: It supports local authorities in analysis, regulating short term rentals, and boosting supply to combat a surge in housing prices. This stems from the idea that affordable and attainable housing is a cornerstone for urban development. As such, cities should have guardrails in place to manage the success of their expansion and redevelopment.While we have shared some examples of success, continued thinking and exploration are needed to drive answers to the complex problems and tensions that underlie the housing challenge. But one thing is clear: The global housing crisis will not be solved by building more units alone. It will be solved by making more informed decisions about where, how and for whom we build.