Amid the talk about tariffs and other Trumpian foibles, little attention has been paid to America’s festering housing crisis. This could prove a more lasting political issue in the US, as well as throughout much of the West.
These trends are the focus of a new report (to which I contributed an introduction) on global housing prices by Wendell Cox. High housing prices, he notes, are widely linked to strict regulatory policies, mostly seeking to hamper suburban growth and force development into urban cores. Almost all the US cities with the highest prices — San Francisco, Los Angeles, and San Diego — have enacted these urban containment or compact city strategies, which force people to live in denser, smaller, and more expensive inner-city housing.
Such approaches are widely popular with planners, progressives, and green activists. However, by restricting development on the more affordable suburban fringe, they drive up housing costs across entire metropolitan areas. This has deepened a stark and unprecedented divide between US regions. In much of the country — especially the Midwest, parts of Pennsylvania, and the South — home prices remain affordable, with median prices roughly three times the median income. By contrast, in coastal California and much of the Northeast, that ratio has surged to around nine to one.
All of this has turned housing into a potent political issue. In a Gallup survey last month, Americans ranked housing as their top financial worry behind inflation. In a Harvard poll of 18- to 29-year-olds last year, housing ranked as the third-most important issue overall, after inflation and healthcare. Meanwhile, around 65% of California residents consider housing costs a major concern — an astonishing figure.
Prices also affect levels of homeownership, long a linchpin of middle-class aspiration. January home sales were down 5% from last year’s dismal numbers. Record numbers of first-time buyers are stuck on the sidelines as housing affordability stands at its lowest level in 40 years, and one in three pay over 30% of their income in mortgage or rent.
The young — tomorrow’s voters — are the most directly hit. According to US Census Bureau data, the rate of homeownership among young adults aged 25–34 was 45.4% for Generation X, but dropped to 37% for Millennials. This decline comes despite nearly three in five Millennials viewing homeownership as a core part of the American dream.
Ultimately, the differential in housing will upset America’s long-term political balance. Housing costs are driving young people, immigrants and minorities to Sun-Belt and even Rust-Belt locales, while the Northeastern and West Coast metros continue to lose domestic migrants. Few young people can expect to afford living in California, where the rich now dominate the housing market, and more than a third of all real-estate transactions in recent years topped $1 million.
Read the rest of this piece at: UnHerd.
Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.
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