Featured Article: The True Reason Behind America’s Housing Crisis

The following message is an abridged version of a Business Insider column written by Civic Action team member Paul Constant. To read the full version, follow this link.

Turn on any conservative news channel and it’s likely that you'll find a sensationalized story about how Democrat-run cities are hellholes overrun with homelessness, crime, and out-of-control housing costs. Pundits love to blame permissive social policies for the disrepair that they highlight, but the truth is that rural America is facing the same problems of skyrocketing crime, housing costs, and homelessness. 

In fact, when you take a good look at America's housing crisis, economist and author Jenny Schuetz explained in an episode of Pitchfork Economics, it becomes clear that it's not a blue state-red state or urban-rural crisis. 

"The big overarching problem, for the whole country, is that we don't have enough homes to go around," Schuetz said. In lieu of a coherent national housing strategy, America has allowed the free market to write America's housing policy, resulting in an excess of luxury homes, a profound lack of public housing, and the criminalization of unhoused communities.

A recent study found that the United States would need an extra 3.8 million homes just to meet current housing needs. Meanwhile, home construction has declined by 55% since 2006 thanks to the housing market collapse and its aftershocks, and because housing prices have skyrocketed over the last 40 years while wages have basically stayed flat, more and more Americans have joined America's unhoused population. 

A true solution to our housing crisis requires the passage of policy solutions at the federal, state, and local level. First, we have to strip power from local zoning boards. Developers looking to build a home, subdivision, or apartment building in much of the nation have to win permission from a local zoning board – and these boards are often populated with local homeowners who seek to increase their own home values by rejecting multifamily or affordable housing. Roughly 75% of all American cities are zoned for single-family homes, restricting the construction of condos, apartments, or even duplexes and triplexes. These exclusionary zoning laws have historically caused – and continue to perpetuate – racial segregation.

But the federal government isn't blameless, either. A number of incentives have been written into the federal tax code "to encourage home ownership over other asset classes as the primary wealth-building" mechanism, Schuetz said. As a result, more than half of all American homeowners now expect the sale of their home to finance a significant share of their retirement. This is a huge equity issue as well: Due to systemic racism, about 43.4% of Black Americans are homeowners – compared to 72.1% of white Americans. This means that Black Americans are disproportionately blocked off from one of the primary avenues to build generational wealth.

When the majority of homeowners and homebuyers treat housing as the foundation of their wealth, as opposed to one of the most basic human needs, the housing market behaves more like an investment market. This combination of zoning, taxing, and investing in real estate to maximize profits creates an unregulated market of winners and losers, with the winners' homes rising sharply in value and the losers left without a roof over their heads.

And Schuetz said the poorest fifth of American households simply can't afford market-rate housing without some extra subsidy. "Only the federal government has deep enough pockets to give every poor family a housing voucher or expand the earned income-tax credit or the child-tax credit," she added. Raising the federal minimum wage could also help those nearly 11 million low-income American households who are paying more than 50% of their annual income on housing. 

If we don't enact policy solutions soon, housing construction will fail to meet rising demand, housing costs will continue to climb, and more and more Americans will become unhoused – and the hyperbolically dismal portrait that the conservative media has been painting may be the future for all of America, not just the blue cities.

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