Housing shouldn’t be a luxury good – but homeownership is way out of reach for many Americans. In the same way that corporate profiteers line their pockets while their workers fall below the poverty line, wealthy homeowners benefit from a rigged real estate system that sees properties surge in value at the expense of millions of renters who have been frozen out of the system. 

For instance, the average American home price soared by almost 15% in 2020. But this wealth is very unevenly distributed. The luxury homeowners are getting richer, while Americans looking for homes in the low or middle tiers of the market are struggling to find anything affordable.

To make buying a house more accessible, there’s an obvious solution: To build enough affordable housing so anyone can afford to rent or own a home. The problem is, many homeowners don’t want affordable housing in their neighborhoods because they believe their property values will go down. These homeowners have become very skilled at organizing their neighborhoods to fight off any attempts to build the affordable housing Americans so desperately need.

In a recent episode of "Pitchfork Economics," Glenn Kelman, the CEO of Seattle-based online real estate brokerage firm Redfin, spoke candidly about homeowner associations, explaining, "They've essentially formed a cartel to keep housing prices high."

Right now, it’s incredibly difficult for lower- and middle-income Americans to get approved for a mortgage, and that impacts the renter’s market, too. When the housing market functioned normally, every time a landlord raised the rent, tenants would weigh their higher rent against the price of a mortgage. But landlords know their tenants can’t qualify for a mortgage, so they can raise the price of rent without worrying about their tenants moving out to buy a house.

This whole system allows the rich to get richer while lower- and middle-income Americans lose money. Those who don’t qualify for a mortgage can rent a home from a homeowner – which means the wealthy homeowner makes more money on their investment and the renter loses money without building any assets of their own.

As our housing crisis has grown and as more Americans are losing their homes, we've started to see more and more corporations step in to finance affordable housing in cities around the country, but this doesn't solve the greater housing problem. Kelman says, “The number one thing that businesses can do (to support affordable housing) is support higher taxes." We must also address the systemic advantages that homeowners have in the zoning and approval process. 

Until everyone has a voice, homeowners will continue to stack the deck in their own favor, and housing will continue to fall out of reach for many Americans. We believe that this system must change – but we want to know what you think. Answer our live poll now:

Should we raise taxes on the rich, change zoning regulations, and adjust the mortgage-approval process to make housing more affordable?

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Thanks for supporting our mission to address income inequality. I really appreciate your support.

Paul Constant

Are you fired up to finally build an economy that works for all Americans? Ready to learn more from the world’s leading economic and political thinkers? Listen to the Pitchfork Economics podcast now!

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