What You Don’t Understand About the Housing Crisis
It’s not as simple as most would have you believe
Can you remember a time when you weren’t seeing headlines about the “housing crisis”? In America and worldwide?
To someone who lived through 2008 and the housing bubble that led to the huge financial crash, as well as some decades when housing took a good part of your take-home pay but not all of it, it is hard to understand why our current housing situation seems to be a never-ending and unsolvable problem.
Why is that? Is the population just that much bigger? Does everybody want big homes and there just isn’t enough land? Does everyone want to live only in the big, popular cities and nowhere else?
Most experts in the planning and urban development area will tell you we just need to build a lot more “units” of housing, quickly.
That’s just wrong. Or, if not wrong, completely simplistic. Here’s why.
One problem, many factors
I live in a suburban community near a healthy Midwestern city (there’s several hospitals here, and a university, meaning I live in an area currently free from most employment woes). I can only afford to live here because I’m a Gen-X townie who moved in when house prices were still connected to reality.
Now, in my town of 20,000 or so, because there is little land left for building single-family homes, developers are currently proposing and building apartment building complexes that will add thousands of residents to the area in the next few years. If you, as a resident, dare to ask for details or question any development that may be taking place next to your home, you are branded a NIMBY and a horrible person who doesn’t want anyone else to live in your precious community.
This is not always the case. Sometimes residents have valid concerns (or, even if you don’t think they’re 100% valid, they’re usually honest and honestly stated) about how much the density of housing around them is increasing, and what increased population will do to property taxes, school crowding, and the provision of adequate services like law enforcement and EMT availability.
Current residents may also have more basic questions, like, where are all these people coming from? Why is growth so much faster than it used to be? Why are apartment buildings the only type of housing being built?
These are valid questions too, and indicate the need for understanding that there is not just one cause of the housing crisis. There are the causes everyone talks about — people are still migrating from rural areas to more urban ones, and yes, the population is growing — but there are also several housing crisis factors that nobody talks about:
- The incredible 20th-century age expectancy increase
A person born in 1950 in the U.S. could expect to live for a little over 68 years; by 1975, the life expectancy was up to 72 years, and people born now can expect to live up to 80 years. This is part of the population increase we already talked about, but if you figure that people need housing for twelve more years of life, that is a large difference from what the housing needs were in 1950.
2. The type of housing those older Americans expect
Baby Boomers, those people aged between 60 and 75 or so, are very forthright about loving their homes and not wanting to leave their homes. Because of the good health many of them have enjoyed, they still feel able to take care of large homes and yards; leading to a situation where 28% of “large homes” owned in America are owned by Boomers (Millennials with kids, by contrast, only own 14% of “large homes”).
Yes, I may sound a little bitter about that. But I also recognize many Boomers may not yet be ready to pay the high cost of assisted living, and many also can’t find smaller homes or condos to downsize into. But at the end of the day, there are a lot of three-bedroom houses out there housing 1 or 2 people, rather than a family or group of 4–6 or so. That makes a difference in your housing numbers.
3. Rich people owning multiple homes
I know several people in my suburb who own homes here, who own homes in Florida or Arizona where they winter, and who also own cabins or vacation homes in different areas of this state. Again, one or two people taking up two to three homes, and not subletting or renting them out when they’re not there.
4. Homes being owned and rented out by private equity firms
Institutional investors (read: rich people) “may control 40% of U.S. single-family rental homes by 2030.”
I know this is happening because I can see it happening in my neighborhood of modest ranch homes. Each block now has several rental properties on it, and they are (mostly) not owned by individuals who live in town or in the state. When those houses are rented out, they take housing off the market for families to buy (because no family can afford to pay what a private equity firm can), and they become very expensive rental homes. Many families I know who rent these houses pay a lot more per month than I do to my mortgage, simply because I lucked into the market at a much better time.
5. Elderly people keeping their homes if they don’t need to sell them to pay for assisted living
Again, this one may be more anecdotal. I know of at least two homes within three blocks of my house that are standing vacant because their owner is in assisted or nursing care but did not need to sell their home to pay for it.
This must also happen elsewhere, if discussions about whether or not to sell a family home when an elderly person leaves it are any indication.
6. Smaller household sizes
For whatever reasons, “households” contain fewer people than they used to. This means there is a much larger number of people, configured into smaller household groups, who need more housing.
“In 2023, there were 131.43 million households in the United States. This is a significant increase from 1960, when there were 52.8 million households in the U.S.”
7. Developers can make money with high-density apartment buildings, so that’s what they build
Every time anyone in my area questions the need for more apartment buildings featuring rents between two and three grand a month, the developers making those proposals simply say they cannot get financing to build condos or townhomes, and that ends that.
The picture is complicated, and you need to look at it more closely
I gave very little thought to housing and city infrastructure and planning before my suburb became the go-to place for local developers to try and force ever-larger and ever-denser housing projects to be built.
You can call me NIMBY if you’d like, but I maintain that what you want in a community is a few people who do care about their backyards, and their neighbors’ backyards, and who would at least like to be reassured that the housing being built does not simply create more luxury housing/apartments for the wealthy and no affordable housing for anyone else.
At the very least it’s a topic you can’t understand just by listening to what economists and others tell you. Walk around where you live. Look at who lives where and do a little Internet searching to find what house values and apartment rents are. Go to some local plan commission and zoning meetings in your area, and don’t be afraid to ask questions.
I don’t know how we’re going to solve the housing crisis. But I do think that before we can start working on solutions for it, more of us have to understand more about how it became such a huge problem in the first place.
