The presidential candidates are failing to address the greatest challenge facing the American economy and American households, say the authors of a new report on housing.
“America faces a growing crisis in housing supply unseen since the aftermath of the Second World War. It is both driving families out of many regions, particularly along the ocean coasts, and forcing many others to live in more crowded dwellings than most prefer,” notes COU Executive Director Joel Kotkin, in the study, a collection of five essays around the issue.
The current shortage of new residential housing in the United States forcing many middle-class Americans and young people to put off or give up the dream of homeownership has a knock-on effect across the economy, resulting in greater economic inequality and slower growth, says Kotkin. The presidential campaigns call for lower taxes and higher minimum wages, but they fail to see how America’s housing crisis contributes, and is at the root, to America’s socio-economic problems.
Examples from the report include:
· Declining homeownership rates drive economic inequality because a home is the single largest asset for middle-class Americans.
· Millennials are being prevented from buying homes dues to rising housing costs and college debt burdens. Bernie Sanders’ promise to forgive student loans gift would be an enormous gift to the housing industry.
· Housing construction has traditionally been a major driver of economic activity in the United States. For this reason, America’s housing crisis also represents an economic crisis, affecting everyone.
· Rebuilding the middle class depends on restoring home ownership. This is the capitalist solution to income inequality.
"You would think that housing affordability would be the No. 1 issue in this year's presidential contest, in light of the concern candidates from both parties have shown over the plight of America's middle class," says Kotkin. "But nowhere amongst the campaign rhetoric do we hear anything about this nation's very real housing crisis. If they care about middle-class Americans, they should put solving this growing problem at the top of their agendas."
Massachusetts Institute of Technology's Matthew Rognlie last year concluded that much of the economic inequality over the past few decades can be attributed to the redistribution of housing wealth away from the middle class, the report states.
The housing shortage is most evident where “smart growth” ideology is strongest. Between 2010 and 2014, most of the cities with fastest new housing growth were historically “liberal” markets with high degree of housing affordability. Seattle was the only smart growth market to see rapid housing growth. Outside Seattle, nearly all the most tightly regulated markets – NYC, LA, SF and Boston – had little new housing built since 2010.
Despite efforts by "Smart Growth" urban planning proponents to push dense urban living, more and more working-class and middle-class Americans opt out of urban cores into the suburbs, where they can find much more affordable options.
But those options may run out in the foreseeable future if the nation fails to make it easier for U.S. housing developers to produce more starter and other homes to accommodate the demand. “Restricting how many families can be sardined into an acre of land has absolutely nothing to do with affordability – if it did the New Urban projects would be the most affordable, not the most expensive,” observes suburban designer Rick Harrison in the report.