In American culture, house ownership is an icon of financial stability. The American Dream is synonymous with owning a house with a front yard and white-picket fence, along with equal economic opportunity, social justice, democratic equality, and individual advancement. This dream could not be any farther from reality. Achieving the American Dream by buying a house has become out of reach for most Americans. Tragically, the effects of the rise of housing costs and interest rates have culminated in a housing crisis that affects homeowners and renters alike. Unfortunately, low-income and minority populations are disproportionately affected.
How did we get here?
How do we have a housing crisis in the first place? In simple terms, it is an issue of supply and demand. There has been a steady increase in demand for housing since the millennial generation, now between the ages of 25 and 40, look for property ownership to accommodate space for starting or growing a family. The Pandemic has also exacerbated demand because working remotely or in a hybrid environment is now typical in the workplace. Because of challenging zoning laws across the United States, there is an alarmingly limited supply of suitable housing. Zoning issues will be discussed later. The point is that high demand and low supply have led to an increase in housing prices over decades. The rise in income simply has not caught up with the rise in housing prices. When comparing housing prices in the 1970s, a couple could afford to buy a house with a median income salary, as the house price was roughly 3 times their salary. Compared to prices in 2022, the average price of a house is now 6 times of the median income salary of a couple looking to buy.
The rise in the price of available housing is not only true for single-family homes but also for renters. The rise in rent price has increased an average of 18% over the last five years. Low-income residents are impacted the most by the rise in rent price, as a higher percentage of their income goes towards paying rent. A new statistic shows that about half of renters pay more than one-third of their salary in housing costs. Renters are more likely to be middle to low-income individuals, single, or young adults (between 18-35 years of age). As the price of rent continues to increase, it is harder for this income group to improve their economic status.
Who is Affected by the Housing Crisis?
Let’s go back to US zoning regulations and the low housing supply. If the housing supply is low, then the simple answer is to build more housing: single-family, condos, apartments, anything! So why is it so hard for housing to get built? The American Dream has become deeply embedded in American culture, making stand-alone houses on a single plot of land normal and desirable. Decades of building low-density housing have saturated the landscape of residential neighborhoods all over the US. New statistics report that in 2021, single-family homes make up over 80% of residential housing in the United States. For mid-sized to large-sized cities, single-family zoning has gridlocked land areas and made it illegal for anything other than single-family housing. For example, in Chicago, Seattle, and Minneapolis the percentage of single-family housing ranges from about 70 to 80% of all residential housing. Sprawling development patterns make it hard for future housing to develop. The remaining 20-30% of land is left to fight for other essential housing types, such as apartment buildings, low-income housing, senior housing, student housing, etc.
While there are other restrictive zoning policies, such as parking requirements, height restrictions, and minimum lot sizes, the single-family zoning policies alone definitively restrict the availability of other types of housing. Housing variety is essential to provide residents with housing that fits their income level. This is more evidence that the US Housing crisis affects the middle to lower-income level.
There is evidence that the housing crisis also affects minority groups. Although zoning laws vary between states, there are recognizable mechanisms that hoard resources in certain neighborhoods while keeping people from other communities out. For example, housing types are separated so that renters are less likely to live among homeowners, thus separating working-class families from affluent families. Buying and owning a home requires generational wealth who can afford down payments. People of color are less likely to have access to generational wealth and therefore cannot buy into single-family neighborhoods. Single-family zoning therefore produces whiter communities.
Single-family zoning is challenging to reverse. Although the country is in dire need of policy reform, it is oftentimes met with resistance from single-family owners. There is much misconception that high-rise construction will destroy the value of the property, either by a fear of traffic congestion, reducing sunlight to adjacent buildings, or hurting the very identity of the community.
So…What now?
Zoning reform is the best way to address the US housing crisis. Minneapolis has up-zoned every single-family neighbourhood at once, effectively making it possible to build duplexes and triplexes on single-family lots. Portland will create zoning that allows duplexes in towns of at least 10,000, amid opposition by homeowners. The country needs housing quickly to solve the housing crisis, and yet progress is slow. To bring change, we must reconsider the American dream. You don’t have to be a single-family homeowner to be an American. We must adopt the mentality that owning a home does not hinder us from achieving both success in life and individualism.
References:
Badger, E. and Bui, Q. (2019) Cities Start to Question an American ideal: A house with a Yard on Every Lot, The New York Times. Available at: https://www.nytimes.com/interactive/2019/06/18/upshot/cities-across-america-question-single-family-zoning.html (Accessed: 10 March 2024).
Churchwell, S. (2022) A Brief History of the American Dream, George W. Bush Presidential Center. Available at: https://www.bushcenter.org/catalyst/state-of-the-american-dream/churchwell-history-of-the-american-dream (Accessed: 10 March 2024).
Schaeffer, K. (2022) Key Facts about Housing Affordability in the U.S., Pew Research Center. Available at: https://www.pewresearch.org/short-reads/2022/03/23/key-facts-about-housing-affordability-in-the-u-s/ (Accessed: 10 March 2024).
Statista. (2021) U.S. Housing Stock by Type 2021. Available at: https://www.statista.com/statistics/1042122/housing-stock-by-type-usa/ (Accessed: 11 March 2024).
Vox. (2021). How the US made affordable homes illegal. [YouTube video]. Available at: https://www.youtube.com/watch?v=0Flsg_mzG-M [Accessed 10 March 2024]
Vox. (2023). Why buying a house in the US is so hard right now? [YouTube video]. Available at: https://www.youtube.com/watch?v=Exza1UYxXXM [Accessed 10 March 2024]
Wamsley, L. (2024) The Hottest Trend in U.S. Cities? Changing Zoning Rules to Allow More Housing, NPR. Available at: https://www.npr.org/2024/02/17/1229867031/housing-shortage-zoning-reform-cities (Accessed: 11 March 2024).
