https://inthesetimes.com/article/affordable-housing-crisis-rising-rent-homebuyers-market
$420,000 was approximately the median price of a house in the United States in 2024, a significant boost from 2019, where the average home costs $280,000. According to ConsumerAffairs, a consumer news platform, a typical American household needs to earn around $124,817 per year to afford an average home, while the average income is only $77,719. Most American households do not meet the average yearly salary to afford a median-priced home. Within the last two decades, Americans under the age of 35 have faced a significant decline of homeownership, dropping from 43.6% in 2004 to 37.9% in 2024 according to a graph from Investopedia.
The U.S. is facing a severe housing shortage and is short of around 4 million homes, a deficit that has increased over the last couple of years. Since the 2008 financial crash, housing construction has struggled to keep up with the immense demand ever since. According to the New York Times, “it is illegal on 75 percent of the residential land in many American cities to build anything other than a detached single-family home” (Badger & Bui, 2019). This means that it is effectively illegal to build dense and affordable housing that Americans need in 75% of urban residential areas. Even if people try to build more homes, getting approval of all the paperwork alone can take two to five years until construction even begins. By the time the home is complete, most people can’t even afford it.
The fundamental causes of this issue come from various factors that have exacerbated the crisis for many years. When the COVID pandemic began to spread massively in 2020, the Federal Reserve dropped interest rates to nearly zero, making mortgages cheaper, triggering many American households to buy houses. This caused a massive problem where demand exploded rapidly, while supply could keep up in response. Simultaneously, the U.S. also faced a severe shortage of construction materials, which slowed down house builds. Then, after interest rates went back up, homeowners who locked in the low rates refused to sell their homes, pushing home prices even higher. Furthermore, large corporations began to buy single home houses in bulk, which pulled off available properties before ordinary households could buy them. All in all, a large demand and little supply created immensely expensive housing prices that regular Americans could not afford.
However, the government and many states have begun to step in and create solutions in response to the severe housing crisis. To illustrate, some states, such as California, Oregon, and Montana, have started passing new zoning reform laws to allow more multi-family and dense housing, creating affordable alternatives to housing.There have also been assistance programs for first time buyer tax credits, yet most critics argue that they are too small to create a real difference in a market where the median housing prices have risen significantly in the last 5 years. Some cities began to put fees on empty investment properties to push empty homes back into the market. However, these measures do not go far enough to cause a massive change. Without massive federal investment in making houses affordable, these solutions are too limited to fix a crisis that is at a national scale. However, some solutions implemented by other countries have been more evident of success. Singapore created a new governmental agency, the Housing & Development Board, that specifically had one job to build homes for Singaporeans. Within a couple years, the crisis was over and now, 90% of Singaporeans own houses. In Austria, Vienna built government-owned houses, where it is then rented out to residents at significantly lower costs than traditional landlord prices. The government is able to charge less for housing since the cost isn’t for profit, but rather needed to cover the costs of building and maintaining the building.
The housing crisis in the United States is very severe, yet other countries, such as Singapore and Austria, have shown solutions that can address these issues. And thus, there is still hope.
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