A Growing Problem Of Unaffordable Housing In U.S.

The following is part of an article at Moyers & Company written by Joshua Holland. There is more,and I urge you to read it. This is a serious problem, that will only grow worse if something is not done.

A series of ugly economic dynamics have come together to create a serious shortage of affordable housing in the US.

The rent is too damn high, and here are some reasons why: Demand for rental properties is way up. Millions of families lost homes in the crash. Others, who might have been able to secure a loan to purchase a home when the banks were handing mortgages out like candy are now unable to meet stricter lending requirements that were put in place after the bubble burst. According to Census data, today’s home ownership rate is around four percentage points lower than it was before the Great Recession.

Supply isn’t keeping up. The crash brought new housing construction to a screeching halt. Typically, builders add around a million housing units per year to keep up with population growth. But between 2008 and 2010, we added only a half million units, and two million more in the three years since then.

So demand for rentals has outpaced supply. Before the crash, 10 percent of rental units were vacant. Today, that figure stands at 7.4 percent. You have to go back almost 20 years, to early 1995, to find a vacancy rate that low.

Meanwhile, incomes for most Americans remain well below what they were before the crash. In fact, when adjusted for inflation, the median income — for the family right in the middle of the pack– is below what it was in 1989. So taken together, median income and rental costs look like this graphic from Mother Jones:

That means renters are spending a larger share of their incomes on housing. The federal government defines housing costs as “unaffordable” when they exceed 30 percent of one’s income. The number of households shelling out more than that — and in some cases more than half of their incomes — has been rising, as this graphic reveals:

(Those who can afford to own aren’t necessarily doing better. While loan rates remain low and sales prices haven’t fully rebounded since the real estate bubble burst, the latest trend on Wall Street is to buy up distressed properties in bulk, take them off the market for a while and then resell them down the road when prices go up. Financial reporter David Dayen writes that this process is “starting bidding wars that have driven up some prices well above national averages.” According to the real estate tracking firm Zillow, even with today’s low interest rates, the total costs of owning a home are above historical norms in 24 of the 30 largest metro areas it covers.)

And these national trends don’t tell the whole story. The real estate markets that were hottest during the growth of the real estate bubble have seen the most painful crashes. So the “affordability gap” is a problem that’s concentrated in select urban areas, and is hitting renters the hardest.

Some cities — and some states — are taking an aggressive approach to their affordability gaps. Others are doing little or nothing to increase the supply of affordable housing.

What’s clear is that at the federal, state and local levels, a lot more could be done.