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Turning a Blind Eye to Today’s Affordable Housing Crisis?

Are we in the midst of another housing crisis? Three housing experts say yes, although today’s crisis is different from the one that shook the housing market and the broader economy 12 years ago. 

While it may not be as dramatic as the last, the experts say if left unaddressed, this new housing crisis could leave a generation of Americans without access to the American Dream. Worse yet, housing will transform from a wealth-building tool to a financial obstacle for Americans. 

“More than a decade after the housing market took down the economy, the nation finds itself in the throes of a different kind of housing crisis. Its effects are subtler, and perhaps, for this reason, it has gone largely ignored,” wrote Jared Bernstein, Jim Parrott, and Mark Zandi in an article for The Washington Post late last week. 

The three authors have extensive expertise in economics and housing. Bernstein served as Chief Economist to former VicePresident Joe Biden and is a Senior Fellow at the Center on Budget and Policy Priorities. Parrott is a fellow at the Urban Institute and owner of Falling Creek Advisors, and Zandi is Chief Economist at Moody’s Analytics. 

The three experts suggested today’s presidential candidates make housing a top priority but pointed out that while most candidates have created a plan to address housing supply, none have yet “put housing policy at the top of their political agendas.”

The housing affordability crisis we face today is widespread and complex. However, solutions are available. 

Median-priced homes are unaffordable for median-income Americans in 71% of counties across the United States, as of Q4 2019, according to ATTOM Data Solutions. 

Additionally, “half of families who rent and nearly one-fourth of homeowners pay more than 30% of their monthly income toward their housing costs, a level widely considered unsustainable,” said Bernstein, Parrott, and Zandi. 

Home price appreciation continues to outpace wage growth. The most recent data from ATTOM Data Solutions reveals home prices grew faster than wages in 76% of counties in Q4 2019. 

One of the major culprits in today’s affordability crisis is a severe supply shortage, according to the economists in The Washington Post, an idea reverberated throughout the housing industry. 

Rising construction costs is one factor that has contributed to the housing supply shortage and the increasing cost of housing. The Trump Administration’s immigration policies and the trade wars are intensifying these issues. 

As “housing is increasingly more of a drain than a source of wealth building,” according to The Washington Post, it is clear affordability is a problem. 

However, it is not a problem without potential solutions. 

DS News recently reported that two researchers from the Urban Institute reviewed top Democratic presidential candidates’ housing proposals. They said the candidates are largely on the right track, but they emphasized the importance of easing zoning and land-use restrictions in order to allow for an increase in construction of affordable housing. 

Bernstein, Parrott, and Zandi agree that easing zoning and land regulations can help the housing market, saying that many local markets have rules that make affordable housing “almost impossible to provide.” 

They suggested offering incentives to communities that ease restrictions and even making federal funding for roads and infrastructure dependent on addressing affordable housing.

The three economists believe the main focus for the housing market should be “policies that reduce the cost of building houses more Americans can afford.” 

They specifically pointed out the Low-Income Housing Tax Credit and the New Market Tax Credit as “tried-and-true programs” that can address the current affordability crisis. 

They find potential in the new Opportunity Zone tax credit that incentivizes investments in distressed markets, and they said the Housing Trust Fund and Capital Magnet Fund should be “scaled up.” 

About Author: Krista F. Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.

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