The nation is gripped in an economic crisis that has progressed through a credit freeze, a business liquidity slowdown, an equity contraction, a consumption decline, and an employment deceleration.

The sheer weight of the housing sector in GDP means that it can help to pull the economy back to health. Add to that the number of jobs involved directly and in supportive industries, housing's impact on the actual wealth of families, and the larger implications for consumer confidence, and it is clear that the housing sector must be put back on track.

One segment that will be critical in bringing the economy back is workforce housing. Generally speaking, workforce housing refers to rental units and for-sale homes for households earning 80 percent to 150 percent of the area median income. It sometimes goes by other names, such as entry-level or middle-income housing. By whatever name, we understand it to mean the broad swath of housing that is the backbone of housing production—and that can be the backbone of the recovery.

Demand for workforce housing is always strong. Families grow, workers change jobs, and people's economic circumstances lift them up from less expensive or even subsidized housing. As a result, the supply of appropriately priced housing for working families is rarely adequate. As we work our way out of this economic turndown, we can expect that there will be pent-up demand for workforce housing because family circumstances will have created a need that could not be met while credit was scarce and job conditions cautioned delays. More cities have recognized that workforce housing of all kinds must be in their residential mix. Urban economic development suffers when workers cannot afford to live near jobs and the costs of transportation now figure more acutely into family housing budgets.

We must stabilize the housing sector with an eye on working families. That means explicitly using the authorities and resources of the recovery to put workforce housing back on its feet. Measures to absorb and reposition the glut of foreclosed properties are critical. Loan modifications to stem foreclosures are essential. And tax measures to shore up builders whose employment capacities will be needed as the economy restarts would be helpful. All of these are precursors to the long-run build back.

Henry Cisneros

Builders must be ready to build more affordably, which means communities that are denser, homes with smaller square footages, and product with more green attributes, particularly energy efficiency. Three demographic trends—aging, minority growth, and smaller households—plus the economics of tightened family budgets and rising transportation costs reinforce the need. Local governments will have to more aggressively collaborate to reduce impact fees, if they want workforce housing. For many cities, the best bet is to recycle land whose old uses have been rendered obsolete by economic change.

The industry must participate in counseling programs that help families understand their options for renting and homeownership and the implications of each. Housing must be principally about providing the benefits of shelter rather than creating a speculative boom for investors who drive up prices and walk away at the first sign of trouble.

The Brookings Institution tells us that between now and 2030, 73 million new residents will create a need for an estimated 20 million upgraded housing units and 30 million new units. The housing sector must first work through the present tumult, and then get ready to build homes for America's working families.

Henry Cisneros is executive chairman of the CityView companies and former secretary of the Department of Housing and Urban Development.