Key points:
- Young Americans struggle with affordability of homeownership due to rising costs.
- Exclusionary zoning laws and the Great Recession have contributed to the housing crisis.
- Inflation and interest rate spikes have worsened the crisis, stifling young professionals’ mobility.
If you want a measure of how the American economy is doing, here’s a deceptively simple one: Can a 30-year-old with a full-time job afford a home?
For millions of Americans today, the answer is a resounding no. Homeownership—a once attainable marker of middle-class stability—is slipping out of reach for an entire generation.
And the damage isn’t just economic. It’s psychological, cultural, and political.
Derek Thompson, in a powerful essay originally published on his site and informed by his work on Abundance, calls today’s housing market “a total disaster” for young people.
He’s right, and the deeper you dig, the more you realize this is not one crisis, but three, nested within each other like Russian dolls: 50 years of exclusionary zoning and broken local politics, 20 years of homebuilding paralysis following the Great Recession, and 5 years of inflation, interest rate spikes, and COVID-era distortions that supercharged the problem.
Start with the 50-year story. Beginning in the 1970s, American cities turned increasingly against growth. Local governments passed restrictive zoning laws, instituted minimum lot sizes and parking mandates, and empowered neighbors to say no to just about everything. These exclusionary policies weren’t just technocratic mistakes. They were often racially and economically motivated, designed to keep low-income families—especially families of color—out of higher-opportunity neighborhoods.
As legal scholar Richard Rothstein and others have chronicled, the architecture of segregation is embedded in these land use decisions. The result? Housing supply plummeted just as urban populations grew.
Then came the 20-year wound left by the Great Recession. The 2008 housing crash obliterated construction firms across the country. Tens of thousands of small builders never recovered. Through most of the 2010s, the U.S. built fewer homes per capita than in any decade since World War II. By the time Millennials reached home-buying age, inventory was scarce, and prices were already soaring.
The last five years have pushed this broken system into outright dysfunction. COVID ignited a demand shock as millions of Americans reassessed their living situations and fled dense cities for suburban homes. At the same time, supply chains broke down, building slowed, and inflation surged. Then the Federal Reserve hiked interest rates to combat that inflation, and suddenly the monthly mortgage payment for a median-priced home doubled.
Now, home prices are high, interest rates are punishing, and existing homeowners are staying put—locked into 2.5% mortgages they’re not about to give up. In 2025, we find ourselves with the highest median age for first-time homebuyers in history: 38. That used to be the median age of all homebuyers.
Young people are right to feel angry. They’re not just imagining this crisis but instead they’re living it. What used to be the decade of ownership—your 30s—has become the decade of frustration, of watching Zillow listings climb out of reach, of staying in overpriced rentals, of giving up on the idea of a backyard and settling for a couch in someone else’s living room.
And it’s not just about dreams deferred—it’s about economic gravity failing to function. A system where people with good jobs cannot afford a place to live is a system out of balance. When young professionals earning solid middle-class incomes can’t break into the housing market, it signals a fundamental failure in how we allocate opportunity.
Housing isn’t just shelter—it’s the foundation of wealth-building in America.
Without access to ownership, people can’t build equity, start families with stability, or stay rooted in their communities. The ripple effects touch everything from family formation to civic participation to retirement security.
If we lock out the very people who should be anchoring the next generation of the middle class—teachers, nurses, engineers, union tradespeople—we’re not just stifling individual mobility. We’re hollowing out the foundation of our economic and democratic life. And eventually, that disillusionment becomes political.
The consequences are far-reaching.
Declining homeownership is linked to delayed family formation, lower fertility rates, declining geographic mobility, and a loss of intergenerational wealth-building. But the political ramifications may be just as important. For decades, housing wasn’t even a top-ten issue in national polling.
Now, for voters under 40, it’s rapidly approaching the top five. These voters aren’t abstractly concerned about “the economy.” They’re concretely furious about rent, mortgages, and the impossibility of moving out of their parents’ homes.
There is, at last, some reason for hope. California—long a poster child for housing dysfunction—has taken major steps to reform its environmental review law (CEQA) to make way for more housing.
New York, under pressure from grassroots groups like Housing Justice for All and pro-housing progressives like Zohran Mamdani, is beginning to reckon with its own barriers. Even presidential candidates are paying attention. Kamala Harris’ most effective ad in the 2024 campaign, according to pollster David Shor, was her promise to reduce housing costs by building more homes.
But the federal government needs to do more.
Thompson proposes a “YIMBY Carrot” strategy—rewarding states and cities that permit more housing with real federal infrastructure and development dollars. It’s a compelling idea. If NIMBYs want to block new neighbors, let them explain to their current neighbors why the community just lost out on money for schools, parks, or transit. Housing policy may be local, but incentives can come from Washington.
Unfortunately, the Trump administration has taken the opposite approach. Instead of investing in housing, Trump has doubled down on scarcity. He’s slapped tariffs on Canadian lumber and Mexican drywall, raising construction costs.
His immigration crackdown chokes the labor supply for homebuilders, who rely heavily on foreign-born workers. His debt policies have rattled bond markets and helped keep long-term interest rates painfully high. If Trump wanted to sabotage the housing market on purpose, it’s hard to imagine a more effective strategy.
This isn’t just about partisanship—heck, we can go down the list of problematic housing policies by both parties and all ideologies.
Instead, we need to focus on priorities.
Some, like Thompson, argue that America needs an abundance agenda—one that sees housing not as a luxury good or a speculative asset, but as a basic building block of middle-class life.
According to this thinking, we must build more homes, faster, in the places people want to live. We must dismantle the barriers that keep cities from growing. And we must stop pretending that the crisis will fix itself if we just wait long enough.
Because it won’t. Not unless we act.
The American Dream doesn’t work without housing. The path to dignity, stability, and opportunity starts with a roof over your head. If we want to rebuild belief in that dream—especially among the young—we’ll need to build something else too: a future they can afford to live in.
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Breaking News Housing Opinion State of California
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Abundance David Shor Derek Thompson Donald Trump Federal Reserve Housing Justice for All Kamala Harris Richard Rothstein Zillow Zohran Mamdani