No Place to Call Home

When Fatima Bradley-Afolorunsho and her family started looking for a house to buy in Columbus, Ohio, about three years ago, she was shocked by the prices. She had grown up in Columbus, and the city of 900,000 had long been known as an affordable place to live.

Her husband has a good job as a bus driver for the city’s public transportation system. She works as a part-time school bus driver. But the soaring costs made the dream of home ownership seem out of reach.

“You could see in their faces they were stressed,” says their 14-year-old son, Quyum, of the long search.

It took the family three years to find a house they could afford. Even then, the purchase was possible only thanks to $25,000 in down payment help from a local organization that assists first-time homebuyers.

Three years ago, Fatima Bradley-Afolorunsho and her family started looking for a house to buy in Columbus, Ohio. She was shocked by the prices. She had grown up in Columbus. The city of 900,000 had been thought of as an affordable place to live.

Her husband has a good job as a bus driver for the city’s public transportation system. She works as a part-time school bus driver. But the rising costs made their dream of owning a home seem out of reach.

“You could see in their faces they were stressed,” says their 14-year-old son, Quyum, of the long search.

It took the family three years to find a house they could afford. The purchase was made possible by a local organization that assists first-time homebuyers with a $25,000 down payment.

The problem the Afolorunsho family encountered in Columbus—the problem of hardworking people with stable jobs struggling to afford housing—is occurring millions of times over in communities large and small across the country.

Home prices have risen about 60 percent over the past decade, adjusted for inflation. About a quarter of renters—some 12 million households—spend more than half their income on housing. As more people move farther from their jobs in search of affordable housing, the ranks of “super commuters”—people who travel 90 minutes or more to get to work—have swelled.

“For a really broad swath of people, housing takes up too much of their income, and that’s how it’s become a crisis,” says Chris Herbert, managing director of Harvard University’s Joint Center for Housing Studies. “Very fundamentally, it’s about affordability, about how much housing costs relative to how much income people have.”

The problem the Afolorunsho family encountered in Columbus is occurring millions of times over. Hardworking people with stable jobs are struggling to afford housing in communities large and small across the country.

Home prices have risen about 60 percent over the past decade, adjusted for inflation. About a quarter of renters spend more than half their income on housing. That’s some 12 million households. People have moved farther from their jobs in search of affordable housing. The number of “super commuters”—people who travel 90 minutes or more to get to work—has swelled.

“For a really broad swath of people, housing takes up too much of their income, and that’s how it’s become a crisis,” says Chris Herbert, managing director of Harvard University’s Joint Center for Housing Studies. “Very fundamentally, it’s about affordability, about how much housing costs relative to how much income people have.”

For housing to be considered “affordable,” economists say a family should spend no more than a third of its income on rent or mortgage payments. The amount a household pays for housing affects how much they have left over to pay for everything else. In other words, the cost of housing ripples through the entire economy.

So why is housing so pricey right now? At the root of the housing crisis is the economic principle of supply and demand.

“For about 15 years now, the U.S. hasn’t been building enough homes to keep up with population growth,” says Jenny Schuetz, a housing economist at philanthropic organization Arnold Ventures. “That means there aren’t enough houses to go around. When you don’t have enough supply, the prices are going to go up.”

In a healthy housing market, several million new houses and apartments get built every year in the U.S. That many new homes are needed to accommodate population growth and to replace older housing that’s deteriorated. But for more than 15 years, that hasn’t been happening. The cumulative result, according to Freddie Mac, the federal mortgage finance agency, is that the nation is short about 4 million places to live.

How did that happen? The problem can be traced back to the early 2000s, when construction companies were building houses like crazy, leading to a huge oversupply of housing. This caused a collapse in home prices and contributed to the 2008 financial crisis, which triggered a two-year period of steep economic decline known as the Great Recession.

Economists say a family should spend no more than a third of its income on rent or mortgage payments. The amount a household pays for housing affects how much they have left over to pay for everything else. In other words, the cost of housing affects the entire economy.

So why is housing so expensive now? The answer is the economic principle of supply and demand.

“For about 15 years now, the U.S. hasn’t been building enough homes to keep up with population growth,” says Jenny Schuetz, a housing economist at philanthropic organization Arnold Ventures. “That means there aren’t enough houses to go around. When you don’t have enough supply, the prices are going to go up.”

In a healthy housing market, several million new houses and apartments get built every year in the U.S. The new homes are needed to accommodate population growth. And they are also needed to replace older housing that’s deteriorated. But for more than 15 years, that hasn’t been happening. According to Freddie Mac, the federal mortgage finance agency, the nation is short about 4 million places to live.

How did that happen? The problem can be traced back to the early 2000s. Construction companies were building houses like crazy. This created a huge oversupply of housing. Home prices dropped rapidly, and this contributed to the 2008 financial crisis. This resulted in the Great Recession, a two-year period of steep economic decline.

During that period, a lot of small homebuilders went out of business. Large homebuilders laid off a lot of workers and cut way back on the number of homes they were building. The U.S. went from building about 2.2 million new homes the year before the crisis to about 600,000 in the depths of the recession. And that number never rebounded to its former level.

Now it’s hard to dig out of this hole because the entire construction industry evolved around this weakened market—reducing the number of workers they employ, the amount of lumber they buy, the amount of land they have on hold to build on. They’re no longer capable of building homes on the scale we need because they’ve never really recovered from the financial crisis.

“The Great Recession broke the U.S. housing market,” says Ali Wolf, chief economist at Zonda, a real estate data and consulting firm.

During that period, a lot of small homebuilders went out of business. Large homebuilders laid off a lot of workers. The number of new homes they were building declined. The U.S. went from building about 2.2 million new homes the year before the crisis to about 600,000 in the depths of the recession. The number of new homes has never rebounded to its former level.

Now it’s hard to dig out of this hole because the entire construction industry evolved around this weakened market. There are fewer workers employed. Builders have less lumber and land. They’re no longer capable of building homes on the scale we need because they’ve never really recovered from the financial crisis.

“The Great Recession broke the U.S. housing market,” says Ali Wolf, chief economist at Zonda, a real estate data and consulting firm.

At first, rapidly rising housing costs seemed like a regional problem. It made sense that prices would be soaring in places like San Francisco, which was already expensive, filled with well-paid tech workers, and subject to strict building regulations. Much of the country was still affordable, so most people saw these as big-city problems that were the exception rather than a warning of a broadening problem.

But the housing crisis has moved from the coasts to the rest of the country, from large metro areas to rural towns. The too-high cost of housing—and all the problems that come along with that—has become a nationwide problem.

Consider the situation of Barbara Tackett-Denney and her husband, Henry Denney, who are struggling to pay their rent in Kalamazoo, Michigan, a small Midwestern city with a reputation for affordability.

Tackett-Denney is a home health aide, and her husband works at a factory that produces parts for hospital beds. Until recently, the couple, who have a combined income of around $65,000 a year, had a pretty comfortable life.

They lived in a two-bedroom apartment in a 100-year-old two-family house that cost only $630 a month. They had enough left over to make two car payments, eat at restaurants regularly, and never stress over the cost of a movie ticket. They were even able to save.

Then their landlord announced he was selling the building. When the Denneys started looking for a new place to live, they couldn’t find anything in their price range.

“It was a culture shock right away,” Tackett-Denney says.

After weeks of searching, the Denneys finally found a place for $1,500 a month—more than double their old rent. They no longer eat out, save, or go to the movies because they have so little cash left over.

At first, rapidly rising housing costs seemed like a regional problem. It made sense that prices would be soaring in places like San Francisco, which was already expensive. It was filled with well-paid tech workers and subject to strict building regulations. Much of the country was still affordable. Most people saw these housing issues as big-city problems that were the exception rather than a warning of a broadening problem.

But the housing crisis has moved from the coasts to the rest of the country. It has spread from large metro areas to rural towns. The too-high cost of housing—and all the problems that come along with that—has become a nationwide problem.

Consider the situation of Barbara Tackett-Denney and her husband, Henry Denney. They are struggling to pay their rent. They live in Kalamazoo, Michigan, a small Midwestern city with a reputation for affordability.

Tackett-Denney is a home health aide. Her husband works at a factory that produces parts for hospital beds. They have a combined income of around $65,000 a year. Until recently, the couple had a pretty comfortable life.

They lived in a two-bedroom apartment in a 100-year-old two-family house. Their rent was  only $630 a month. They had enough left over to make two car payments, eat at restaurants regularly, and never stress over the cost of a movie ticket. They were even able to save.

Then their landlord announced he was selling the building. When the Denneys started looking for a new place to live, they couldn’t find anything in their price range.

“It was a culture shock right away,” Tackett-Denney says.

After weeks of searching, the Denneys finally found a place for $1,500 a month. Because their rent has more than doubled, they no longer eat out, save, or go to the movies. They have so little cash left over.

For the lowest-income households, paying a huge chunk of your income for housing forces difficult trade-offs, Herbert, the Harvard housing expert, explains: Is it more important to keep current on rent payments even if it means there’s not enough left to get your car fixed and afford your medications?

“For middle-income families, the trade-offs are less dire, but they are painful,” Herbert says.

Spending too much on rent or mortgage makes it hard for families to save money for their children’s education and for their retirements. And the high cost of housing forces many families to live much farther from their jobs than they’d like, leading to long, stressful commutes.

Housing assistance is now also becoming part of a nationwide trend. Once primarily aimed at addressing poverty, it’s expanding to support middle-class families as well. In Kalamazoo County, for example, families earning up to $121,000 a year qualify to buy subsidized houses in a recent development.

For the lowest-income households, paying a huge chunk of your income for housing forces difficult trade-offs. Herbert, the Harvard housing expert, explains: Is it more important to keep current on rent payments even if it means there’s not enough left to get your car fixed and afford your medications?

“For middle-income families, the trade-offs are less dire, but they are painful,” Herbert says.

Spending too much on housing makes it hard for families to save money for their children’s education and for their retirements. It forces many families to live much farther from their jobs than they’d like, which leads to stressful commutes.

Housing assistance is now also becoming part of a nationwide trend. Once focused on addressing poverty, it’s expanding to support middle-class families. In Kalamazoo County, for example, families earning up to $121,000 a year qualify to buy subsidized houses in a recent development.

As housing costs have spiked in recent years, the phenomenon of families “doubling up” has also increased. About 30 percent of working-age Americans are currently living with friends or family because they can’t afford their own place, according to Zillow, an online real estate company.

Arabella Martiere, 18, lives in one of those households. The high school senior lives with her mother and younger brother in a friend’s two-bedroom house in Hartford, Vermont, where both home prices and rents have soared in recent years. Nine people and four dogs currently share the small space.

“As a teenager, I’d like privacy, so that makes it hard,” Martiere says. “Also doing schoolwork, there’s just a lot of people around. It would be nice to be able to just sit in your own space.”

While the housing crisis remains very real for millions of Americans, economists say there are reasons to be hopeful.

“At a time when almost every issue is breaking along partisan lines, housing affordability and supply is not one of those issues,” says Schuetz, the housing economist.

As housing costs have spiked in recent years, the phenomenon of families “doubling up” has also increased. About 30 percent of working-age Americans are currently living with friends or family because they can’t afford their own place, according to Zillow, an online real estate company.

Arabella Martiere, 18, lives in one of those households. The high school senior lives with her mother and younger brother in a friend’s two-bedroom house. Nine people and four dogs currently share the small space in Hartford, Vermont, where both home prices and rents have soared in recent years.

“As a teenager, I’d like privacy, so that makes it hard,” Martiere says. “Also doing schoolwork, there’s just a lot of people around. It would be nice to be able to just sit in your own space.”

The housing crisis remains very real for millions of Americans. But economists say there are reasons to be hopeful.

“At a time when almost every issue is breaking along partisan lines, housing affordability and supply is not one of those issues,” says Schuetz, the housing economist.

Indeed, a bunch of states, both Democratic- and Republican-led, have passed bipartisan legislation in recent years to ease regulations and encourage more housing construction. These include California, Florida, Maryland, Montana, New Jersey, New York, Oregon, and Utah. And more states are considering new laws this year.

There isn’t one silver bullet that will solve the housing crisis, experts say. Instead, we need to try a bunch of different changes to chip away at the problem. One solution is to allow more backyard homes—sometimes known as granny flats. That way, a homeowner can build a space for a renter or family member. Another is to shrink lot sizes so several smaller houses can be built on a parcel currently reserved for only one larger home. Cities and states are also altering zoning rules to allow two-family and three-family houses in neighborhoods currently designated for only single-family homes.

Edward Pinto, co-director of the housing center at the American Enterprise Institute, has been studying the roots and effects of the nation’s housing crisis for years. The problem requires immediate action at all levels of government, he says.

In trying to explain the importance of taking steps now to address the housing crisis, Pinto poses a question directly to America’s teenagers:

“This may seem like a remote problem to someone who’s 16, but it’s not,” he says. “If we don’t solve this, where will you live 10 or 15 years from now?”

Both Democratic- and Republican-led states have passed bipartisan legislation in recent years to ease regulations and encourage more housing construction. These include California, Florida, Maryland, Montana, New Jersey, New York, Oregon, and Utah. And more states are considering new laws this year.

There isn’t one silver bullet that will solve the housing crisis, experts say. Instead, we need to try a bunch of different changes to chip away at the problem. One solution is to allow more backyard homes. A homeowner can build a space, known as a granny flat, for a renter or family member. Another is to shrink lot sizes. This allows several smaller houses to be built on a lot currently reserved for only one larger home. Cities and states are also altering zoning rules to allow two-family and three-family houses in neighborhoods currently designated for only single-family homes.

Edward Pinto, co-director of the housing center at the American Enterprise Institute, has been studying the roots and effects of the nation’s housing crisis for years. The problem requires immediate action at all levels of government, he says. Pinto poses a question directly to America’s teenagers:

“This may seem like a remote problem to someone who’s 16, but it’s not,” he says. “If we don’t solve this, where will you live 10 or 15 years from now?”

With reporting by Conor Dougherty of The New York Times.

With reporting by Conor Dougherty of The New York Times.