In the United States, one in four renters spends over half their income on rent, and millions of potential homebuyers can’t find a home within their price range, says Harvard University’s Joint Center for Housing Studies. Put simply, there are far more people trying to find housing than there are places to buy or rent, pushing prices beyond what many can afford.
The supply shortage is worst in big cities. But in recent years, home ownership, or even finding a good rental, has begun to feel out of reach for more people.
Why We Wrote This
More people are seeking homes than there are places to buy or rent, which contributes to high prices. Here’s what led to the housing crisis, and some potential solutions.
Rent is increasing for just about everyone, says Alexander Hermann, senior research associate at the Harvard center.
The 2008 recession and the pandemic hurt housing production, and demand from buyers and renters caught up. Municipal zoning laws favor single-family homes, limiting multi-family dwellings. Plans for affordable housing are often opposed by homeowners who, one expert says, may be acting on “misperceptions and myths.”
As one solution, some states are passing laws designed to spur housing development.
Jesse Kanson-Benanav, executive director of Abundant Housing Massachusetts, says a family living on minimum wage can’t afford to live in most places. That has spurred “a national movement” of advocacy for affordable housing.
In the United States, one in four renters spends over half their income on rent, and millions of potential homebuyers can’t find a home within their price range, according to Harvard University’s Joint Center for Housing Studies. Put simply, there are far more people trying to find housing than there are places to buy or rent, pushing prices beyond what many can afford.
It’s striking how universal the issue has become for renters, says Alexander Hermann, Senior Research Associate at the center. Zillow estimates 4.5 million fewer homes are available than the number of Americans likely to be looking to either rent or buy.
“[Rents are] increasing for households of every race and ethnicity,” he says. “They’re increasing for households who are employed. They’re increasing for households at every age. It’s not just any one group that’s experiencing greater affordability challenges. It’s basically everyone on the renters’ side.”
Why We Wrote This
More people are seeking homes than there are places to buy or rent, which contributes to high prices. Here’s what led to the housing crisis, and some potential solutions.
Here’s a look at how we got here.
What is affordable housing?
Affordable housing is a technical term used by policymakers and statisticians, as well as a harder-to-define social phenomenon. They both reflect the idea that people should not spend more than a certain proportion of their income on rent or mortgage.
The federal government defines affordable housing as costing the renter 30% or less of their income. It uses a measure called Area Median Income – the midpoint of the distribution of household incomes of a certain place, a measurement that prevents particularly high incomes from affecting the ratio. It’s used by entities from local agencies to the U.S. Department of Housing and Urban Development. For example, HUD offers section 8 vouchers – which help people afford housing in the private market – for those who make 80%, 50%, and 30% of the median income figure where they live.
The supply shortage is worst in big cities, particularly on the coasts. But in recent years, home ownership, or even finding a good rental, has begun to feel out of reach for more and more people.
When Jesse Kanson-Benanav, executive director of Abundant Housing Massachusetts, first became a housing advocate in Cambridge in 2012, he found the conversation limited to places like Boston, New York City, and D.C. Now, he says, a family living on minimum wage can’t afford to live in most places, which has spurred advocacy.
“It is a national movement in a way that it wasn’t when I started doing this work,” he says.
Why are we experiencing a housing crisis right now?
More people are struggling to pay for housing because of the 2008 financial crisis and inflation brought on by the pandemic, according to Mr. Hermann.
From the 1970s until the early 2000s, housing stock grew faster than households, creating a healthy buffer, he says. Poor quality housing stock was demolished, and some units remained vacant, allowing people to move where they wished, while prices remained reasonable for those not at the lowest end of the income spectrum.