Why The U.S. Housing Market Is An Unaffordable Nightmare

When you're going through one of those periods where everything around you seems to generally go to hell, it's only a matter of time before a "helpful" friend tries to make you feel better with "Well, at least you have a roof over your head!" Because, yeah, you might definitely live in a place with four walls, a ceiling, and, hopefully, a door, actually procuring a place to live in America is way harder than it should be.

See, we don't - technically - have a housing shortage; we have an affordable housing shortage. Or an "allocation challenge." Take Denver, Colorado, for example. The population has grown and home building has lagged, leading to an estimated deficit of 30,000 homes. At the same time, the city has some 19,500 unoccupied housing units and a homeless population of around 4,000 individuals. So why in the name of Cthulhu aren't people who need homes living in all the ones that are available?

Simple: they're too expensive. In Denver, the average rent for apartments constructed after 2010 is a whopping $2,087 each month, well above the overall average rent of $1,582, and completely out of the budget stratosphere for most needing a place to live. According to Natriece Bryant, deputy director of the Colorado Department of Local Affairs, what the city desperately requires isn't new, expensive apartments but basic housing for those in the lowest income brackets...who can only afford a rent of around $500 per month. And if you're thinking "Ummm, ONLY $500 a month? Who can't afford that?", you're definitely not helping.

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Denver is just one example of a nationwide issue. In New York City, the average price of a condo has risen from $1.15 million in 2011 to $3.77 million in 2019, which is why almost half of the sparkling new and insanely luxurious condos that have come onto the market in the past five years are, gasp, still unsold. In Seattle, 1 in 10 luxury apartments are sitting empty while more units are built every day. Despite this imbalance, Seattle remains one of the most expensive places in the entire country to rent, with rental rates growing even faster than average home prices, making the city generally "unaffordable" for people not earning good money.

In Chicago, affordable homes are in short supply and sell immediately, while luxury homes sit unsold for months. The same is true in Cleveland, and Santa Monica, and Charlotte, and Philadelphia...you get the picture. It's absurd. So why is it happening constantly? Why aren't we building "normal" apartments real people can afford instead of overpriced palaces that sit empty for years and don't do anyone any good?

In a nutshell, it all comes down to the astronomical cost of construction. Developers are having to absorb the rising costs of land, labor, and construction materials, and the truth is that it costs virtually the same to build a "luxury" building as it does to build a mid-market one - the "guts" of both buildings are essentially identical. So for very little more in terms of upgraded finishes inside units, developers are able to shoot for higher rents and a much better return on their investment. "Why build for broke when you can build for the bourgeoisie?", basically.

The problem is even worse in larger cities with international populations. Many of their new and woefully overpriced housing units aren't built for locals at all, but for "foreign plutocrats" with "tens of millions of dollars to spare" on their fifth or sixth home. Even worse, some are built as cash sinks for global capital and never intended to be occupied at all, just used as a parking lot for cash.

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And before you get all hopeful and think, "Well, maybe it's time to take the plunge and buy a house!" know that the problem isn't limited to condos and apartments. Newly-built homes in the United States are among the largest in the entire world, and in the past 50 years, the average home size per resident has doubled. In the 1970s, forty percent of new homes had fewer than two bathrooms. Today, a whopping 96 percent have at least two bathrooms. And while we're definitely not against having a place to poop, what that translates to is higher home prices and declining home ownership. Millennials are significantly less likely to own homes than previous generations at the same age, and home ownership by young black Americans has fallen to its lowest rate in 60 years.

The unfortunate truth is that without some sort of incentive or directive for developers to build no-frills, entry-level homes or mid-range rental units, those in lower-income brackets will continue to struggle to find decent, affordable homes. And sadly, being unable to purchase property - or purchasing property later in life - means entering retirement age with little or diminished financial security. Mom's basement isn't looking so shabby anymore, huh?

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