With America's housing shortage affecting affordability both renters and buyers face challenges. (Courtesy photo)
With America's housing shortage affecting affordability both renters and buyers face challenges. (Courtesy photo)

Anyone trying to buy a house that doesn鈥檛 cost an arm and a leg, or hoping to land an affordable rental unit knows how difficult and frustrating that goal can be to achieve.   

America has been plagued by a severe housing shortage for at least a decade with the COVID-19 global pandemic laying bare the deficiencies in the housing and rental ecosystems. A housing analysis report released by Realtor.com in March laid out the scope of the problem.  

According to Realtor.com鈥檚 Hannah Jones, housing markets in the U.S. continue to struggle because of a significant shortage of new homes, as a consequence of more than 10 years of under-building relative to population growth.鈥 

Jeffrey Hayward, executive vice president and chief administrative officer with FannieMae said in a 2022 article that the causes of the鈥痟ousing supply crisis鈥痑re widely understood.  

鈥淎fter the Great Recession, new home construction dropped like a stone. Fewer new homes were built in the 10 years [that] ended 2018, than in any decade since the 1960s,鈥 he said. 鈥淏y 2019, a good estimate of the鈥痵hortage of housing units for sale or rent鈥痺as 3.8 million. The pandemic-induced materials and labor shortage exacerbated the trend, however, as evidenced by the surge in rents and home prices in 2021.鈥 

Hayward said increased mortgage interest rates 鈥 which The Federal Reserve has used to try to cool inflation 鈥 鈥渉ave already reduced housing demand, particularly for new homes, and a possible economic slowdown could reduce demand further.鈥 

Americans have been dealing with record high inflation and mortgage rates, amid a housing affordability crisis driven by low inventory, alarmingly high rents, and a drop in real wages. 

As real estate analysts predicted, the multiple pressure points affecting housing eased this year. According to the National Association of REALTORS, housing affordability had double-digit declines from a year ago in all four regions of the country.  

鈥淭he South had the biggest decline of 25.3%, followed by the Midwest with a dip of 25.1%. The Northeast experienced a drop in affordability of 22.2%, followed by the West, which fell by 19.2%, the NAR said. 鈥淎ffordability was up in all regions from last month.鈥  

But even as housing market prices and rents have begun to stabilize and fall in some markets, the supply issue remains acute particularly for low- and moderate-income families. A U.S. House panel鈥痳eport鈥痳eleased in July 2022 said 鈥渃orporate landlords鈥 evicted tens of thousands of residents last year despite鈥痶he鈥痚victions moratorium implemented during the COVID-19 global pandemic, just as private equity firms and businesses are gobbling up real estate at a record pace. 

Challenges for Renters

Juan Pablo Garnham, Audience and Community Engagement Manager at Princeton University鈥檚鈥疎viction鈥疞ab, said those forced to rent now face obstacles because of government policies and business acquisition of property. 

“In many parts of鈥痶he鈥痗ountry, there鈥檚 鈥 been regulations that limit access to renters and low-income people, which add pressure to鈥痶he鈥痬arket, including zoning restrictions and limitations for building more units,鈥 Garnham said in a 2022 interview.聽

He said鈥痶he鈥痳ent squeeze is also exacerbated by 鈥渕ore corporate groups and LLCs buying鈥痟ousing鈥痠n larger numbers, increasing rent prices, making it more difficult for individual buyers to compete, and potentially provoking evictions and displacement.”聽

In a report last year, the鈥疦ational League of Cities (NLC) said鈥痶he鈥疷.S. suffered from a shortage of seven million affordable rental homes. In addition, renters racked up billions of dollars鈥 worth of debt after falling behind during鈥痶he鈥痯andemic.鈥 As a consequence, the鈥疦LC said, many cost-burdened households are now spending more than half of their paychecks on rent and utilities, as opposed to鈥痶he鈥30% level often recommended by financial planners. 

Eliana Roberts Golding, Senior Policy Analyst for Housing and Workforce Development鈥痑t the DC Fiscal Policy Institute, said it鈥檚 a question of economic policy priorities in a society that sees鈥痟ousing鈥痑s a commodity and not a basic human right. Too many elected officials and policymakers, Golding added, look at鈥痟ousing鈥痠ssues in starkly financial terms.聽

“For example, renters can鈥檛 take any deductions, but mortgage interest deductions are available to those holding wealth through鈥痶he鈥痑sset of鈥痟ousing. And there are policy choices on鈥痶he鈥痜ederal and local levels that we can鈥檛 undo,鈥 Golding said. 

She described鈥痶he鈥疍istrict of Columbia鈥檚 rent control policy as “very outdated,” and in need of an overhaul. 

“Rent control is a way to temper markets and keep units, but it has remained stagnant and every year, we lose units,鈥 Golding said. 

Housing Crisis and Race

Golding emphasized it is impossible to discuss鈥痶he鈥痟ousing鈥痗risis without talking about race. She said鈥痶he鈥疷nited States has to reckon with鈥痶he鈥痗onsequences of generations of racially discriminatory policies and programs devised by federal, state and local elected officials, corporations, stakeholders and others that has locked African Americans out of communities using redlining, restrictive covenants and barriers as well as blocking Black people from buying homes, securing loans and mortgages, and limiting鈥痶he鈥痑reas of cities and towns where they might live.聽

鈥淭he鈥痯resent system is built on de jure racism, discrimination, segregation and inequity. Certain places received investments and others [Blacks] didn鈥檛,” Golding said. “As you鈥檙e investing in one place, that increases in value while causing displacement of people unable to afford homes and apartments spurring gentrification.鈥澛

Some solutions experts, analysts and advocates offer as ways to address both鈥痶he鈥痟ousing and affordability crises is for Congress and state lawmakers to move expeditiously to expand America鈥檚鈥痟ousing鈥痵tock; revamp evictions laws; boost funding for rental assistance to low-income people; and remove exclusionary zoning and other laws which have historically been used to bar primarily Black and brown lower-income residents from living in more well off suburban enclaves and boost their access to jobs, quality, high-performing schools and other features. 

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