Browse all articles on Housing
David Dayen: Introduction
Robert Cruickshank: Make It Legal to Build
Sulma Arias: Why We Need a Homes Guarantee
Ryan Cooper: The Housing Industry Never Recovered From the Great Recession
Tara Raghuveer & Ruthy Gourevitch: Look for the Tenant Union
Paul Williams: FIMBY: Finance in My Backyard
INTRODUCTION
BY DAVID DAYEN
The easiest story to tell about the 2024 election is a tale of widespread anger at the cost of living. The main driver was the inflationary period after the pandemic, affecting the cost of groceries in particular. It also includes the supply shocks that caused shortages in things like semiconductors and baby formula and critical prescription drugs. It includes the climate change–induced skyrocketing of home and auto insurance. It includes the consequences of the Federal Reserve’s attempts to control inflation, raising the cost of borrowing on everything from mortgages to car loans. And it includes some aspects of daily life that have been seeing higher costs for decades, like child care and medical treatment.
But if you wanted to reveal the linchpin of the cost-of-living crisis, it would be the cost of housing. In fact, we have more of a housing inflation crisis than an inflation crisis overall. For quite a while now, housing has been the one aspect of the Consumer Price Index that has refused to be tamed, stubbornly affixed at higher levels while the cost of other goods and services has come down.
In fact, the greatest swing toward Donald Trump in the presidential election came in urban centers like Chicago and New York City, where rising housing prices and homelessness are most acute. Migration patterns away from expensive blue cities and states correspond mostly to housing affordability; even LGBT people and other threatened groups seeking to relocate from conservative areas struggle to move to safety, because of housing.
The pervasive unaffordability of housing will have massive political implications if not turned around. Left unchecked, the flight from our costly coasts will shrink the Democrats’ electoral vote base following the 2030 census. But it’s not just a political crisis, of course; it’s a social one. America’s mega-cities are the nation’s most dynamic, with the highest levels of economic growth. Pricing out middle-class and working people means locking millions of Americans out of opportunity and a better future. And homelessness is a moral scourge that demands better of policymakers.
Answering the question of what to do about all this too often devolves into a game of mutual recrimination on social media. The truth is that the housing shortage has many causes, and just as many options for how to fix it. So we have assembled a symposium on housing, designed to highlight some of those solutions without getting into the tit for tat.
Before we get started, we have to go back in time. Decades ago, there was simply a greater variety of housing tailored to new arrivals in a city: modest starter homes, single room occupancy boarding houses, or other entry-level solutions. More important, housing production kept pace with population growth and household formation. The hinge point was 2006, the first year that the housing bubble began to collapse. We have been in a shortage spiral ever since.
Scarcity has been extremely lucrative for a privileged few. Twelve new billionaires have been created in the homebuilding industry over the past few years; these homebuilders control more of the market and make more profit while building fewer homes. Financial engineers have used scarcity as a cover to correlate rent increases throughout markets, something that only dissipated somewhat due to state and federal price-fixing lawsuits. Corporate landlords use junk fees and outright thievery to enrich themselves at tenants’ expense. And the national program used to subsidize low-income housing has become an enormous cash cow for housing conglomerates. The status quo is wildly inequitable.
Disparate camps review this state of affairs and promote narrow solutions, looking past how they can work together. In this symposium, we pair calls for relaxing zoning rules to expand supply with calls for building tenant power to fight landlord abuse. We have essays about the need to fill a financing gap in housing that’s ready to be built, and essays about the extraordinary recent consolidation in homebuilding, and how it has atrophied the entire process. It’s illegal to build some private housing, and it’s illegal to build most public housing. All these problems must be worked on.
Despite the new regime entering Washington, housing is typically regulated and overseen at the local level, so while no national fix is in the offing, there is no reason progress has to be stalled. In fact, there’s no alternative but to get started.
Our goal was to submit these various ideas in a public forum, to see if they are complementary, and whether they can ameliorate the terrible injustice of unaffordable housing. I hope readers, and policymakers, find them useful.
Make It Legal to Build
BY ROBERT CRUICKSHANK
This summer, the pro-housing, pro-cities Yes In My Backyard (YIMBY) movement won over the highest levels of the Democratic Party to our solutions for the country’s spiraling housing crisis. Former President Barack Obama said in his speech at the Democratic National Convention, “If we want to make it easier for young people to buy a home, we need to build more units—and clear away some of the outdated laws and regulations that made it harder to build homes for working people in this country.”
Vice President Kamala Harris made similar statements in her own speech to the DNC, vowing to “end America’s housing shortage.” In North Carolina a few days earlier, Harris said, “In many places … it’s too difficult to build, and it’s driving prices up … We will take down barriers and cut red tape, including at the state and local levels. And by the end of my first term, we will end America’s housing shortage by building three million new homes and rentals that are affordable for the middle class.”
YIMBYs had already been gradually winning the argument in the lower levels of the Democratic Party before Obama and Harris came aboard. And not only Democrats have embraced this agenda. In fact, YIMBY legislation at the state level in Montana, Washington, and even California passed in large part due to Republican votes, sometimes when Democrats could not provide the votes to pass it in state legislatures where their party was in the majority.
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Why We Need a Homes Guarantee
BY SULMA ARIAS
I want you to meet my friend Carlos. Carlos grew up in Chicago, but had to move when housing prices for renters like him went through the roof. He’s visually impaired, so needs a familiar environment he can navigate with his cane, and supportive services. He found none of these in his new city but can’t move home, because there’s nothing he can afford, even in neighborhoods plagued with gun violence. Chicago is just too expensive now.
“I wish they’d make housing more affordable, so people don’t have to pay an arm, a leg, and their whole body in rental fees,” he told me. “They need to make things affordable for people with disabilities.”
Carlos’s dilemma is far from unique: Millions of us live on the brink of eviction and homelessness as we struggle to pay our rent or mortgage. We are in the midst of our country’s worst housing emergency since the Great Depression. Many of us have to choose daily between housing and basic necessities like food and health care.
So when Carlos heard Tim Walz say during the vice-presidential debate that we need to stop treating housing as a commodity, it gave him hope. He volunteered to make calls with People’s Action Power to help Walz and Kamala Harris get elected, as one of the thousands of volunteers who joined us to make more than four million calls to battleground states.
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The Housing Industry Never Recovered From the Great Recession
BY RYAN COOPER
In labor economics, there’s a concept called hysteresis. It means that severe economic downturns have lingering effects that go beyond the immediate pain. For example, high unemployment can cause people to lose skills, and cause employers to be more selective in who they hire. When the labor market comes back, those workers scarred by the initial shock don’t benefit, and the unemployment rate overall can stay stubbornly higher.
The housing market has been subject to a form of hysteresis. It’s an underappreciated but important challenge to the crisis of undersupply and rising costs for shelter.
If you read the Prospect, you probably know something about the great housing bubble collapse. The rise of securitization spiked global demand for mortgages, which lenders satisfied with more exotic (and even illegal) terms for borrowers. The bubble was unsustainable; homeowners were missing their first mortgage payment, which is impossible without something going deeply wrong with the market. The interconnection of these fraudulent bets meant that defaults on mortgages cascaded through the financial system and triggered a devastating collapse that hobbled the rest of the economy in what is now known as the Great Recession of 2008.
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Look for the Tenant Union
BY TARA RAGHUVEER & RUTHY GOUREVITCH
Derek Harris works two jobs to afford the one-bedroom apartment in downtown Kansas City he’s lived in for ten years. During that time, the owners have changed and conditions have worsened. The kitchen he used to love to cook in is filled with mousetraps. The wall is streaked with dirty brown stains from plumbing leaks. There is no vent, just a huge hole near the ceiling.
“I’m paying higher rent than I’ve ever paid for a place that feels more like a prison than a home,” Derek announced at a recent rally to launch his tenant union.
Derek’s experience, working multiple jobs and handing over the majority of his paycheck to live in squalor, is not an exception but the new normal for many poor and working-class Americans. Housing is most Americans’ biggest monthly bill. When families are forced to cut back on expenses, cutting back on housing is simply not an option. Today, half of all tenants spend over 30 percent of their income on rent, with more than one-quarter spending over 70 percent. Evictions are at a historic high, most often impacting Black women and their babies. As landlords hike rent and evict tenants, more than 650,000 people sleep outside.
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FIMBY: Finance in My Backyard
BY PAUL WILLIAMS
I grew up on a tree-lined street in Columbus, Ohio, a mile or two from the Ohio State University campus. It was populated mostly by single-family homes with nice-sized yards and driveways, and dotted with duplexes every few lots or so. At one corner, there were two small apartment buildings with six or eight homes each, and at the other, an elementary school. This always felt prototypically American to me—as anyone’s childhood neighborhood presumably feels. Color me surprised when I grew up and learned that such a street would be illegal to build in most cities in the country today.
Rewriting zoning laws to legalize such normal-seeming neighborhoods is core to any housing agenda. But even when it is legal to build, there are still hurdles—and beyond those, solutions. Right now in Massachusetts, there are 40,000 apartments ready to be built that haven’t yet put shovels in the ground. The tools are there, as are the permits, the workers, and tenants ready to move in. What’s missing is capital investment.
Local governments can meet this urgent challenge. But before we get there, let’s start with a sketch of the past 20 years of the housing sector.
