Nurture small developers to ease Lancaster County’s housing crisis, ‘Strong Towns’ founder Chuck Marohn advises
Chuck Marohn speaks at West Art on Thursday, Nov. 13, 2025. (Photo: Caleb Bornman)
Toward the end of the “Give Me Shelter” forum on Lancaster County's housing crisis, local panelist Ethan Demme summarized the broader theme he was seeing emerge.
"What you're really talking about," he told keynote speaker Chuck Marohn, "is democratizing financial access and bringing labor and capital together at a local scale ... (to) create local financial prosperity."
Marohn agreed, then offered his own phrasing of the idea. Right now, he said, there's enormous demand for entry-level housing, but the market that should be generating supply is broken. Who's going to fix it? Not the federal or state government. That leaves local governments and communities to step in.
"We can actually fill that part in and make our competitive market more complete," he said.
Marohn, an engineer and land use planner by trade, is the co-founder and president of Strong Towns, a Minnesota-based nonprofit media organization. It contends that the postwar "suburban experiment," with its pursuit of short-term growth has saddled households and governments alike with unsustainable levels of debt.
Strong Towns advocates for "a bottom-up revolution": Local governments, it says, should prioritize small experiments over large interventions and encourage grassroots builders and entrepreneurs rather than regional or national developers.
On Thursday, Nov. 13, Marohn spoke at West Art to a crowd of more than 130 planners, nonprofit leaders and interested community members on the Strong Towns approach to the housing crisis. The event was organized by Lancaster's Strong Towns chapter and the Coalition for Sustainable Housing, with support from the Lancaster County Community Foundation and the Lancaster City Alliance. (A full list of participating organizations is at the end of this article.)
In his keynote presentation, Marohn traced the history behind America's current housing crisis, as detailed in his 2024 book, Escaping the Housing Trap.
After World War II, government planners feared that the economy would fall back into recession. So they took the tools created to rescue banking and real estate during the Great Depression, and deployed them to engineer an unprecedented housing boom.
"We built this brand new version of America," he said, with cities and suburbs as "engines of growth." Fueling the expansion was a new financing model: Ever-lower down payments, 30-year mortgages, a huge secondary market where mortgages were packaged and sold to investors, and the federal government as mortgage insurer and lender of last resort.
We celebrate that era as a great success, Marohn said, and indeed, the 1950s and 1960s witnessed unprecedented middle-class prosperity. But fuelling it was a huge runup in private mortgage debt that was packaged, resold and held by banks as collateral. That debt leads to systemic risk: All it takes is an uptick in inflation, or a decline in housing values, and suddenly balance sheets are dangerously underwater across the system. The consequences have played out in multiple crises, most recently the subprime mortgage bubble and crash of 2000-2008.
The upshot? Home prices can't be allowed to fall, or they'll take down the financial system and the broader economy. But the high prices that underpin investor confidence and keep markets from seizing up are punishing for average households, putting affordable shelter farther and farther out of reach.
"This is the trap," Marohn said.
Moreover, the need to issue mortgages that are sellable on secondary markets has choked off the supply of all but a handful of cookie-cutter products. Banks will happily finance suburban subdivisions or five-over-one apartment buildings. But small starter homes or “missing-middle” apartments? Not so much.
How should communities respond? If they keep trying to make the existing system work for them, they will always be frustrated, Marohn said. Instead, they should aim to empower themselves and their constituents, through three strategies:
Reform regulations: Repeal rules that raise housing costs, such as minimum lot size and setback requirements and bans on backyard cottages
Build a local development ecosystem: Bring together the small-scale builders, tradespeople and would-be developers in your community. Encourage them to problem-solve, share ideas and grow their capacity.
Localize finance: Large banks aren't going to front the money to build backyard cottages, starter homes and small apartments: Their business model rests on cookie-cutter products and economies of scale. But if local nonprofits, community banks and government step in, they can build an alternative financial system that stays local and serves local needs.
Strong Towns has created toolkits for the first two; the toolkit for the third is coming early next year.
At root, Marohn said, housing is a moral issue and getting people into houses “is a very moral thing to do.”
From left: Douglas Smith, Chad Martin, Ben Lesher, Ethan Demme, Dana Hanchin, Chuck Marohn, moderator Samantha Gray. (Photo: Jade Dennis)
What Lessons for Lancaster?
In a Q&A following Marohn's talk, five local stakeholders peppered him with questions drawn from their own experiences in Lancaster County's housing market.
Developer Ben Lesher said he'd love to build small projects, but he always feels the pressure to go big, because that’s where the financing is.
That gap is there, Marohn agreed, and filling it requires creativity. One example, he suggested: Municipalities use financial services on a large scale, which means they have market power. They could choose to bank with institutions willing to offer loans for local incremental projects; the municipality's business would offset the costs of writing those loans and holding them locally.
Demme asked Marohn for his thoughts on rooming houses. Municipalities are reluctant to allow them openly, considering them nuisance properties, but they’re often countenanced tacitly, with cheap hotels and other properties that serve that function operating in a regulatory gray area.
There are legitimate concerns with rooming houses for municipal regulations to address, Marohn said, primarily around health and safety. But banning them outright – that’s going a step too far.
Former Lancaster Chief Planner Douglas Smith asked Marohn if he liked the idea of preapproved plans – ones a city will agree in advance are allowed to be built. Absolutely, Marohn said – have a menu of starter homes, backyard cottages and small apartments that fit your city, and let people build them without further ado.
Too often, cities fail to understand the role their own bureaucracy plays in discouraging the kind of development they say they want to see. Kalamazoo, Michigan, tried sending a routine building permit application through its approval system and found it took 60 days, including 43 days spent sitting on the fire chief's desk awaiting action. After reform, the city cut the time down to one day.
Have a sense of proportion, Marohn said. Big projects have big impacts, so they deserve heightened scrutiny. For small projects, a lighter, quicker touch suffices. Yes, that raises the chance that a review will occasionally miss something, but "they'll be mistakes we can live with."
Local nonprofit HDC MidAtlantic builds medium to large-sized affordable housing projects, subsidized through federal tax credits and other programs. Does that kind of development have a role in Marohn's vision, HDC President Dana Hanchin asked.
Anyone who's building housing is doing a good thing, Marohn said, but he admitted he's not a fan of subsidized affordability, for two reasons. First, getting such projects financed is far harder than it should be – Developers like HDC must move heaven and earth to assemble their capital stacks and work within the restrictions imposed by various funding streams. Second, he said, subsidized housing will never "scale" sufficiently. You’re building, at best, hundreds of affordable units in markets that need thousands.
But mightn’t incremental development have scale issues, too? Chad Martin, executive director of nonprofit developer Chestnut Housing, asked how small developers grow into taking on more ambitious "missing middle" projects – the 4-unit to 8-unit buildings that once were common, and that many advocates believe are vital to easing the housing crunch.
Lesher noted that Lancaster County needs an estimated 18,500 new housing units. At an average cost of $350,000 each, that's nearly $6.5 billion – quite a lot to expect small developers to produce.
Watch the movie Dunkirk, Marohn suggested. It depicts a fleet of hundreds of small ships rescuing the British Army in 1940 when the British Navy couldn't. They were nimble and adaptable, and there were swarms of them.
Sure, Marohn said, if small efforts stay isolated, they won't scale up, but try nurturing them and watch what happens. The ecosystem will grow, and more would-be developers will jump in. As they complete smaller projects, some of them will develop the capacity to graduate to missing-middle work. He cited South Bend, Indiana, where incremental developers by the dozens are pursuing projects worth tens of millions of dollars.
"You do get compounding returns from it in a way that does scale impressively," he said. "... Exponential growth is an astounding thing."
"Give Me Shelter: A Strong Towns Conversation With Chuck Marohn," took place at West Art on Nov. 13, 2025, thanks to support from the following organizations:
Strong Towns Lancaster
Coalition for Sustainable Housing
Lancaster County Community Foundation
Lancaster City Alliance
Power Interfaith of Central PA
Hourglass Lancaster
Larkstone
Wonder City Studio
The Row House
Kegel's Produce
Additionally, thank-you's go to restaurants Norbu and La Cocina Mexicana for their catering services.
