We need to develop a sense of urgency about the growing problem of providing adequate shelter.
From the earliest settlement of the country, Americans have looked at their homes and apartments as critical elements of their own aspirations for a better life. In good times, when construction is strong, the opportunities for better, more spacious and congenial housing — whether for buyers or renters — tends to increase. But in harsher conditions, when there has been less new construction, people have been forced to accept overcrowded, overpriced and less desirable accommodations.
Today, more than any time, arguably, since the Great Depression, the prospects for improved housing outcomes are dimming for both the American middle and working classes. Not only is ownership dropping to 20-year lows, but there is a growing gap between the amount of new housing being built and the growth of demand.
Our still-youthful demographics are catching up with us. After a recession-generated drought, household formation is again on the rise, notes a recent study by the Harvard Joint Center for Housing Studies. In some markets, there isn’t an adequate supply of affordable housing for the working and middle classes. Overall, according to the research firm Zelman and Associates, the country is building barely one-third the number needed to meet the growth in households. Overall inventories of homes for sale are at the lowest level in eight years.
The groups most likely to be hurt by the shortfall in housing include young families, the poor and renters. These groups include a disproportionate share of minorities, who are more likely to have lower incomes than the population in general. This situation is particularly dire in those parts of the country, such as California, that have imposed strong restrictions on home construction. California’s elaborate regulatory framework and high fees imposed on both single- and multi-family housing have made much of the state prohibitively expensive. Not surprisingly, the state leads the nation in people who spend above 30 percent, as well as above 50 percent, of their income on rent.
Sadly, the nascent recovery in housing could make this situation even more dire. California housing prices are already climbing far faster than the national average, despite little in the way of income growth. This situation could also affect the market for residential housing in other parts of the country, where supply and demand are increasingly out of whack.
Ultimately, we need to develop a sense of urgency about the growing problem of providing adequate shelter. As a people we have done this many times – with the Homestead Act, and again, after the Second World War, with the creation of affordable “start-up” middle- and working-class housing in places like Levittown (Long Island, N.Y.), Lakewood (Los Angeles), the Woodlands (Houston) and smaller subdivisions, as well as large-scale cooperative apartment development in places like New York City. Government policy should look at opportunities to create housing attractive to young families, which includes some intelligent planning around open space, parks and schools. It is important to ensure that a sufficient supply of affordable housing is allowed throughout metropolitan areas, for all income groups.
Nothing speaks to the nature of the American future more than housing. If we fail to adequately house the current and future generations, we will be shortchanging our people, and creating the basis for growing impoverishment and poor social outcomes across the country.
This is the executive summary from a new report, America’s Emerging Housing Crisis, published by National Community Renaissance and authored by Joel Kotkin, with Wendell Cox. The full report is available for download at joelkotkin.com. Kotkin is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University. His next book, The New Class Conflict, will be released in September.