By nearly every measure, the American housing sector is broken. For decades, city, state and federal policies have contributed to rising rents, falling subsidies and the systematic shift of homeownership to older, richer and whiter Americans.
That’s the undeniable upshot of a new report from the Joint Center for Housing Studies at Harvard University. The report compiles hundreds of metrics on the health of America’s housing sector and finds that, despite some short-term progress since the recession, the long-term prognosis is grim.
The housing crisis is the ticking time bomb at the heart of the American economy, wiping out savings, increasing inequality and reducing the ability of workers to weather the next recession. It has been in front of us all along, but now, finally, it is impossible to ignore.
1. Low-Cost Housing Is Disappearing From The Market
For decades, housing costs have risen faster than incomes. Since 1960, renters’ median earnings have gone up 5 percent while rents have spiked 61 percent; homeowners earn 50 percent more while home prices have gone up 112 percent.
This has obvious human costs. As the National Low Income Housing Coalition reported earlier this month, a growing share of the nation’s renters cannot afford to live in the cities where they work. In 2016, nearly half of renters were considered cost-burdened — i.e. they spend more than 30 percent of their income on rent — a proportion that has more than doubled in the last 50 years.
Rising rents also have indirect impacts. The Harvard study noted that the cities with the greatest increases in housing costs also have the greatest increases in homelessness. Expensive housing encourages private equity firms and other investors to buy up apartment buildings and evict the current residents. Displacement leads to sprawl, long commutes and workers spending more time away from their families. From cheap restaurants to affordable childcare to neighborhood community centers, rising rents are a tsunami that sweeps away support networks and social amenities critical to low-income residents.